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Senate approves restriction on foreign hires by banks receiving bailout

AP Investigation: Banks sought foreign workers

SANTA CLARA, Calif. - Major U.S. banks sought government permission to bring thousands of foreign workers into the country for high-paying jobs even as the system was melting down last year and Americans were getting laid off, according to an Associated Press review of visa applications.

The dozen banks now receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions that included senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households.

As the economic collapse worsened last year — with huge numbers of bank employees laid off — the numbers of visas sought by the dozen banks in AP's analysis increased by nearly one-third, from 3,258 in the 2007 budget year to 4,163 in fiscal 2008.

The AP reviewed visa applications the banks filed with the Labor Department under the H-1B visa program, which allows temporary employment of foreign workers in specialized-skill and advanced-degree positions. Such visas are most often associated with high-tech workers.

It is unclear how many foreign workers the banks actually hired; the government does not release those details. The actual number is likely a fraction of the 21,800 foreign workers the banks sought to hire because the government only grants 85,000 such visas each year among all U.S. employers.

During the last three months of 2008, the largest banks that received taxpayer loans announced more than 100,000 layoffs. The number of foreign workers included among those laid off is unknown.

Foreigners are attractive hires because companies have found ways to pay them less than American workers.

Companies are required to pay foreign workers a prevailing wage based on the job's description. But they can use the lower end of government wage scales even for highly skilled workers; hire younger foreigners with lower salary demands; and hire foreigners with higher levels of education or advanced degrees for jobs for which similarly educated American workers would be considered overqualified.

"The system provides you perfectly legal mechanisms to underpay the workers," said John Miano of Summit, N.J., a lawyer who has analyzed the wage data and started the Programmers Guild, an advocacy group that opposes the H-1B system.

David Huber of Chicago is a computer networking engineer who has testified to Congress about losing out on a 2002 job with the former Bank One Corp. He learned later the bank applied to hire dozens of foreign visa holders for work he said he was qualified to do.

"American citizenship is being undermined working in our own country," Huber said in an AP interview.

Beyond seeking approval for visas from the government, banks that accepted federal bailout money also enlisted uncounted foreign workers, often in technology jobs, through intermediary companies known as "body shops." Such businesses are the top recipients of the H-1B visas.

The use of visa workers by ailing banks angers Sen. Chuck Grassley of Iowa, the senior Republican on the Senate Finance Committee.

"In this time of very, very high unemployment ... and considering the help these banks are getting from the taxpayers, they're playing the American taxpayer for a sucker," Grassley said in a telephone interview with AP.

Grassley, with Sen. Richard Durbin, D-Ill., is pushing for legislation to make employers recruit American workers first, along with other changes to the visa program.

Banks turned to foreign workers before the current economic crisis, said Diane Casey-Landry, chief operating officer for the American Bankers Association. The group said a year ago that demand exceeded the pool of qualified workers in areas like sales, lending and bank administration. Now with massive layoffs, the situation is different, Casey-Landry said.

The issue takes on a higher profile as the government injects billions of dollars into the economy and President Barack Obama pushes for massive government spending to create jobs nationwide, on top of the $700 billion already approved for the ailing banks.

"You're using taxpayer dollars and there's an expectation that there are benefits to the U.S.," said Ron Hira, a national expert on foreign employment and assistant public policy professor at the Rochester Institute of Technology. "What you're really doing is leaking away those jobs and benefits that should accrue to the taxpayers."

But New York Mayor Michael Bloomberg believes more access to "worldwide talent pools" will better position U.S. financial companies against global competitors, spokesman Andrew Brent said.

The U.S. Customs and Immigration Service declined to disclose details on foreign workers hired at the banks that have received federal bailouts. The AP has requested the information under the U.S. Freedom of Information Act.

Nearly all the banks the AP contacted also declined to comment on their foreign hiring practices. Arlene C. Roberts, spokeswoman for State Street Corp. of Boston, which has received $2 billion in bailout money, said the company has reduced H-1B hiring in recent years, and just hires for specialized positions.

Jennifer Scott of Yreka, Calif., a retired technical systems manager at Bank of America in Concord, Calif., said in 2004 she oversaw foreign employees from a contractor firm that also sent overnight work to employees in India.

"It had nothing to do with a shortage, but they didn't want to pay the U.S. rate," she said, adding that the quality of the work was weak. "It's all about numbers crunching."
 
The opposers of Foreign workers point out:

1. foreign workers are hired only for cost alone-- i.e pay more to the American worker..

The folks mad at bank Executives feel:

2. The Banks swindled tax payers money -- those Banks should reduce costs/pay including of their executives (which mean everybody indirectly..if there is pay cap for CEOs, you cannot expect other workers in the banks to be earning more than the CEO)..

Does anybody see the inherent contridiction in these two statements?

So at the same time the tax payers money has to used to bail out banks, they also want the banks to be inefficient in terms of their cost structure..

For the most part, H1 B workers are not hired just to reduce cost, as it is widely publicized..
there are stringent checks for the H1b process as well as the green card process - which can take even 10 or more years to complete. Research has also shown that every H1B job generates 5 additional jobs. In addition H1B workers pay all the taxes that the American worker pays and gets no benefits that a US born worker gets.

Fact Check: American banks, even those that get TARP money have huge international operations, and get significant revenue and profits from abroad, and maybe if they did not have such operations, most have been dead and gone, not even available to employ any workers, forget american workers. It is also a fact that their foreign operations are growing at a much faster rate.

Secondly, the number of work visas issues are a miniscule propotion of the overall workforce of the USA, and to blame work visas as a disaster for the american worker, is portraying the American worker in poor light. American workers are respected for their competence by the entire world

Thirdly, if a country were really opportunity poor(say Zimbabwe) why would they ever think of importing talent from abroad? In other words, if a country has foreign talent, it only shows, that the country has opportunities which are lacking elsewhere, and America should be proud of it.

Finally, there is an organization called WTO and many countries(including USA) are its signatories. If the US wants other markets opened for its products is it okay for it to say that it will close its market to a small percent of its service sector?

Yes, I agree that there might be some workers in America with some genuine greivences, but that is true of any other country in the world, be it UK, be in Poland, be in Brazil, be it South Africa. most likely citizens of poorer countries have much greater greivences..
Such greivences should be addressed, but should not result in poorly thought policies that has nothing to do with the solution proposed(does anybody care to remember Smoot Hawley Act in 1929 and what it caused? ) I hope America will show leadership and not anything less that that at this time.
 
The opposers of Foreign workers point out:

1. foreign workers are hired only for cost alone-- i.e pay more to the American worker..

The folks mad at bank Executives feel:

2. The Banks swindled tax payers money -- those Banks should reduce costs/pay including of their executives (which mean everybody indirectly..if there is pay cap for CEOs, you cannot expect other workers in the banks to be earning more than the CEO)..

Does anybody see the inherent contridiction in these two statements?

Nope, I don't see the contradiction. Many people say tht the stratospheric wages of CEOs and other assorted scoundrels on the one hand and the low wages further down the chain of command on the other are two sides of the same coin: that those 9-figure bags of swag these plunderers have been taking home are directly related to the increasing exploitation of labor. Thus, labor's share of the economic cake has been going down relative to capital and upper management. If labor was paid $80,000 instead of $35,000, top management would be taking home $2,000,000 and not $200,000,000. Society wouldn't be so polarised between haves and have-nots. The USA would more start resembling Japan and Germany. But perhaps this is a pipe dream as there's too much else wrong with the US, and this increasing polarisation is really symptomatic of a deeper economic and social malaise.

So at the same time the tax payers money has to used to bail out banks, they also want the banks to be inefficient in terms of their cost structure.

So, let's get yuor logic right: paying incompetent senior mangers at the helm of loss-making firms $100m bonuses and golden parachutes is somehow "efficient." Hmmm, I'll have to mull over that one.

For the most part, H1 B workers are not hired just to reduce cost, as it is widely publicized.There are stringent checks for the H1b process as well as the green card process - which can take even 10 or more years to complete.

These are not factually correct statements. Visa fraud for the H1B has been endemic. And the DHS has been so swamped with work and undermanned that due process has often had to be circumvented or been cursory at best.

There may be occasions when a heart surgeon or fields medalist mathematician is hired -- they are truly sui generis. But in the overwhelming majority of cases, the motive is lower cost.

And American capital has also been spared the task of bringing American education up to scratch. Better and cheaper to pillage and pilfer from other parts of the world rather than invest in social capital at home. This is why one can see faultlines, chasms between American secondary schoos and American undergrad education, and also between undergrad education and graduate schools of engineering, comp sci, physics, and math. But I digress.

has also shown that every H1B job generates 5 additional jobs.

Ah yes, "research." The same "research" that demonstrated NAFTA was going to create more jobs for Americans, for example? Let us leave this "research" to the likes of Tom Freedman and other shills and cheerleaders of global finance.

In addition H1B workers pay all the taxes that the American worker pays and gets no benefits that a US born worker gets.

This is true. Capital loves indentured labor.

Some things need to be made explicit. It's silly to scapegoat migrant workers: they're seeking better lives for themselves like everyone else and have to play the hand they're given as best they can. What some people object to is capital pitting one group of workers (American) against other groups of even more intensely exploited workers (migrants). Capital -- along with the global status quo it has created -- is the real culprit.
 
.....
Secondly, the number of work visas issues are a miniscule propotion of the overall workforce of the USA.....

I think this point should be emphasized more. Compare 65000 H1-B work visas issued per year with the approx 600,000 jobs lost in the month January alone. I think lawmakers have just raked up this issue to make it appear that they are fighting for the American public.
 
New H1B Rules Removed by Obama

February 12, 2009 by HSB

Last 1 week, all H1B Visa applicants were curious to know the impact of New H1B rules that would prevent companies receiving TARP funding to Hire [FONT=&quot]H1B Visa[/FONT] workers. It looked like that new H1B Visa Rules will be passed to become a Law. But, looks like things took a dramatic turn today behind closed doors.

New H1B Rules Removed

Today President Obama and few others have asked to remove the new rule from the stimulus bill. Last week 2 Senators introduced a new H1B rule into the [FONT=&quot]stimulus package[/FONT]. When new bill is added, majority of the Senators have to approve it. Each state in U.S. has 2 Senators.
In last week’s voting, majority of the Senators agreed to include the new H1B Visa rules into stimulus package. So, [FONT=&quot]banks[/FONT] that receive funding cannot hire H1B workers who are paid less then $60,000 and don’t have advanced degree.
Stimulus Bill was introduced into US House of Congress and members of House voted for a Big Stimulus bill. For the Bill to become a law, US Senate also have to vote and approve on the Bill. Senators made some changes to the Bill and they voted. H1B bill was also added in the Senate.
First, bank Stimulus Bill was passed by US Congress House. Since, changes were made to the Bill in Senate, now they have to vote again and Bill have to passed. Only after both US Senate and US House agrees on a Bill, US President have to sign it to make it a Law.
Negotiations was going on between US Senate and US House of Congress on what to include and reach a compromise. President Obama and 2 other congress members made sure that New H1B rules will be removed from the Stimulus.

Impact of Removing H1B Hiring rule

After H1B Rules are deleted from the stimulus bill, banks that receive [FONT=&quot]money[/FONT] from US can hire H1b workers. So, that’s good news to many H1B Visa applicants and also to current employees working the in those banks. If you wonder, how this could have happened?
Well, my guess could be very high profile lobbying from attorneys and others. They could have talked to Mr. President Obama and others explaining the impact of not [FONT=&quot]hiring[/FONT] H1b workers and maybe impact must have been more than not hiring.

Is it confirmed?
So far I have read in couple of places only about this breaking news. It will be few more hours before other sites updates the news. If there is any change, you can find the update here. Stay tuned. So, do you think is good news, if so write your thoughts as comment below.

 
It should be noted that Obama cannot alter or vote on any legislation. He can't "remove" things from the legislation. He does not have the power to do that. He can only veto the final bill. The President can, however, "ask" for certain things to be done. But, he can't force any congressmen to do anything unless they are willing to listen to him.
 
Whatever this big O can veto or not, I think for most visit this website, escpecially current students, H1B applicants (or to-be's) don't really need to worry too much.

1. First of all, unless there's LAW that requires all industries to use/hire "Made in USA" only, otherwise, think about it this way, how many "banks that reviece TARP funding" in total ? Still many banks don't take this TARP and more other financial institutes and hedge funds needs talents and need to hire.

2. For banks, instead of "hire H1B workers who are paid less then $60,000 and don’t have advanced degree', I think many of this kind of jobs can be outsouced-----IT, Operation, customer service.....----out of the country, as it is.

3. For advanced degree holders/MFEs, most of the bank receive TARP pay at least 1.5--2 times the niminum of $60,000 (please refer to Baruch MFE Placement and Salary rate post by Andy). Which doesn't not fall under the requirement at all. Unless you are willing to take a quant job at $59,999.

4. If you are the right candiate, you will get it.


Cheers!
 
As of Feb 11 2009 391 financial institutions received TARP money. Many of them are banks.
Here is a TARP map:

Map: Show Me the TARP Money



But I'm sure Obama will take care of this H1B problem. Within this year he will be able to do whatever he wants.
 
From my own personal perspective, I know a brilliant young lady whose English is more or less perfect (nearly without any trace of accent) and who looks like she's from the US or at least Europe. Except to my utter surprise, she's from Jordan, and it's only her second year in the states. So for the fact that she's utterly brilliant (getting her Ph.D next year) and a wonderful person just to be around, and some other reasons, I want her sticking around in the US, and to that end, have been sending her any companies that came up on my radar to help her with her internship search. I hope she makes it to the highest places.

This doesn't make me cringe, though. God James Simons himself stated that Renaissance hires mostly foreign-born people, simply because there are very few Americans cut out for the job, which is why he started MfA.

So I don't think those with the merit* will have any more trouble finding work, with protectionism or not, simply because there aren't many natural-born citizens to compete with anyway.

*Merit includes being able to surpass the language barrier. No man or woman is an island.
 
The guy from Max's post about H1B rule removed from stimulus bill has corrected himself that in fact, the H1B is still in the bill.
Greg Siskind's Blog: LIGHTER SANDERS H-1B PROVISION INCLUDED IN STIMULUS BILL
Reports in some quarters that the Sanders Amendment was stripped from the stimulus were incorrect and the measure remains in the stimulus bill about to be voted on by both Houses of Congress.

The bar on all hiring of H-1Bs by banks receiving bailout funds was modified in the Senate and now allows the banks to hire H-1B workers but comply with the H-1B dependency rules. The rule will be in effect for two years. As I noted earlier in the week, this bill will only affect a few hundred workers as most of the recipients of TARP funds barely use the program.

Note that the dependency rules will apply regardless of whether the employer has fewer than 15% of employees in H-1B status and regardless of whether the employee makes greater than $60,000, two bases for exemptions in normal dependency situations. We believe, however, that the rule does not apply to extensions.

Banks receiving the funds will need to check the H-1B dependent box on the Labor Condition Application form and make the following attestations:

1. Hiring H-1B workers will not displace US workers in the employer's work force.
2. Hiring H-1B workers will not displace US workers in another employer's work force (secondary displacement).
3. The employer recruits and hires US workers that are equally or better qualified than the H-1B non-immigrant applicant.

The non-displacement rule bars employers from laying off workers in essentially equivalent positions and replacing them with H-1B non-immigrants. The lay off period covered is the 90 days before and ending after the filing date of the H-1B petition. As for what is "essentially equivalent" USCIS will look to job responsibilities, duties, qualifications, experience and area of employment.

To prove it has not violated the non-displacement rules, employer must retain all records relating to the termination of employees during the 180 day period. The regulations list a variety of items that must be retained including the terminated worker's job title and description, experience and qualifications, assignments, documents related to the departure of the employee, documentation relating to job performance, etc.

Dependent employers must also demonstrate that they have attempted to recruit US workers to fill the position that is the subject of the H-1B petition. Recruiting must meet industry-wide standards and offer salaries as high or higher than being offered to the H-1B worker.
 
Here is a fresh article from WSJ (February 21st) and I think the news could be worse for international students:

Bill Adds Hurdles for Foreign Hires - WSJ.com

WASHINGTON -- A little-noticed provision in the stimulus package discourages banks that receive federal bailouts from hiring skilled foreign workers, and it likely foreshadows broader efforts to restrict work-related visa programs this year.

The provision imposes higher government scrutiny on banks and other businesses getting federal bailouts if they use the H-1B visa program to hire skilled workers. The program generally grants temporary visas to at least 85,000 workers a year, often more.

Associated Press

Iowa Sen. Charles Grassley, right, wants to tighten the H-1B visa program that allows U.S. companies to hire skilled foreign workers.


Supporters say the program is needed to help companies obtain the most qualified workers, particularly in fields such as engineering. They say the program is designed with stringent protections, requiring employers to attest they aren't replacing U.S. workers and to pay prevailing wages to foreign workers.

But critics say the program, initiated in 1990, undermines U.S. workers by encouraging companies to hire temporary workers. They also say many of the protections built into the H-1B law don't work as intended, allowing U.S. employers to pass over American workers and hire cheaper foreign ones. Lawmakers are concerned that the program is being abused by some companies that exploit loopholes to cheat their foreign workers.

"While we are suffering through the worst economic crisis since the Great Depression, the very least we can do is to make sure that banks receiving a taxpayer bailout are not allowed to import cheaper labor from overseas while they are throwing American workers out on the street," said Sen. Bernie Sanders, a Vermont independent who pushed for the restriction.

Mr. Sanders's office estimates that major U.S. banks employed at least 1,200 foreign workers under the program in 2006. Other critics say the total number hired in recent years is likely several times higher. A list of companies receiving H-1B visa approvals in 2007 included J.P. Morgan Chase & Co. (236) and Goldman Sachs & Co. (224) among the top 30, and Lehman Brothers Inc. (135), Merrill Lynch & Co. (131) and Morgan Stanley & Co. (119) among the top 100. The visas typically are for three years but can be extended to six.

Another sponsor of the restriction for bailed-out banks, veteran Sen. Charles Grassley (R., Iowa), is planning further legislation to tighten up the H-1B visa program as well as other visa programs for temporary workers. He is working with Sen. Richard Durbin (D., Ill.). A spokesman for Sen. Durbin said the intent isn't to reduce the number of H-1B provisions, but to shut down abuses.

One big concern for critics of the H-1B program is the practice of some companies that function as temporary-employment agencies, bringing employees to the U.S. and putting them to work for other companies. Sen. Grassley says these employers can locate in areas of the country such as his home state, where prevailing wages are low, and then underpay workers they assign to California's Silicon Valley or other high-wage regions.

But concern over the H-1B program itself appears to be rising. Sen. Sanders is considering additional legislation that would prevent companies engaged in mass layoffs of U.S. workers from importing cheaper labor from abroad through temporary guest-worker programs, a spokesman said Friday.

As originally proposed, the stimulus bill's provision would have barred bailout recipients from hiring foreign H-1B workers altogether. But it was watered-down in last-minute negotiations, amid protests by businesses.

Business advocates argued that in 2007, less than 1% of the workers at major U.S. financial institutions were H-1B visa holders. "At a time when the economy is striving to rebound, barring U.S. companies access to the most qualified job applicants...will hinder recovery," the U.S. Chamber of Commerce argued in a letter to senators on Feb. 5.

Instead of barring H-1B workers, the stimulus law temporarily increases the number of procedural hurdles that banks and other bailout recipients must clear. It also gives the government much greater ability to scrutinize companies' hiring practices when it comes to the foreign workers.

Despite that partial victory, proponents of the H-1B program foresee more struggles ahead, particularly given the recession.

"There will be more attempts to tighten not only H-1B but all the temporary worker programs," said Bob Sakaniwa, a business immigration advocate at the American Immigration Lawyers Association. "Especially with Democrats in charge on the Hill who have legitimate concerns for U.S. workers and are listening to labor's concerns...we'd be kidding ourselves if we thought more tightening and enforcement weren't in the wings."

Supporters of the H-1B program concede some abuses and are hoping to focus the legislative efforts on addressing those, "while at the same time keeping the programs viable for legitimate uses," Mr. Sakaniwa said. He noted that many H-1B workers in the banking field are expensive. The program also requires employers to pay application fees and in some cases travel, he said.

The stimulus bill's restriction already is drawing criticism in foreign media, and from some foreign officials. Angelo Amador, the U.S. Chamber's director of immigration policy, said he heard that Indian officials were complaining this week to U.S. visitors about the new restrictions.

"At some point there has to be a realization that we're not in this alone," Mr. Amador said.
 
To me, an American is someone that assimilates into the culture and is just looking for a way to be an honest citizen, with a strong effort to command the English language.

Which makes some immigrants far more American than some nth-generation US "citizens" who refuse to assimilate and demand special treatment from employers.
 
Interesting article Vadim.
The whole debate is based on demagogues trying to get a better image for their constituents. The number of H1-B visas per entire work-force is minuscule. If we remove several IT companies, then we need to go to basis points ...

If we focus on financial sector, we find a conservative approach. We do not find a bank applying for 5,000 or 10,000 H1-B. Some numbers from the article:
J.P. Morgan Chase & Co. (236) and Goldman Sachs & Co. (224) among the top 30, and Lehman Brothers Inc. (135), Merrill Lynch & Co. (131) and Morgan Stanley & Co. (119) among the top 100.

These companies have over 25-30K employees, number of H1-B is <1%. Is this decisive for the overall compensation?
If we add smaller financial companies (e.g. hedge funds) we find even a smaller percentage of H1-B.
 
The point is not that it is a small % but the point is that there shouldn't be a single job sack to an American at the cost of a foreign national.This is the logic behind the ban.
 
The point is not valid and risky for U.S. in medium-term as many other people pointed on this thread.
However, for sake of argument, let's assume everyone agrees that we need to ensure no American job is lost before a person with H1-B. I have argued here that financial sector holds a small percentage of the "problem". Wouldn't you want to go after the companies that apply for 5,000-10,000 visas?
 
It's not about logic; it's about culture wars.

The concept that you can really measure "job displacement" is designed around manufacturing, not the information economy; every candidate is different in education and experience, let alone soft skills that are not measured. There are a lot of "qualified" people who will not get hired even if the position will go unfilled because of these intangibles.
 
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