Your Money

Where is Your Money? What is it Doing?

What choices do we have about where to deposit our money?

• Commercial banks (and internet banking services) are big national corporations owned by stockholders who get the profits. Big banks may be able to offer higher interest rates because they don’t have the cost of services to the local community and individual depositors. But when we allow these banks to grow too large and powerful they fail to consider the consequences of their actions on our communities.
• Small community banks are often locally owned and invest in the community (although some of them did buy the bundled bad loans.)
• Credit unions are owned by the depositors, make loans to them, and tend to give profits back to the depositors as higher interest. Money in credit unions and community banks, like commercial banks, is insured by the Federal Government.

Check out the stability of the financial institution you are considering here.

Why are many people in this country outraged by big commercial banks?

• They took our money and gambled with it causing the present global economic recession.
• They give huge salaries and bonuses to top executives.
• They made misleading loans to people that could not afford the loans, just to make more profit.
• They took tax funded bailout money while refusing loans to small businesses who then failed.
• Some made record profits after the bailout.
• They have taken their head offices far from their depositors.
• They have not been accountable for the mess their greed created.
• They continue to give huge salaries and bonuses to top executives.

What is the effect on our communities of investing locally?

Studies show that money spent locally creates more business and jobs. Credit unions and local banks often keep the benefits of investing and banking closer to home, providing an alternative to the large banks for investment in our local communities.  "On one end are the nation's 6,900 small, locally owned, community banks.  These institutions control $1.4 trillion in assets.  That's 11% of all bank assets.  The currently have $257 billion in lonas to small businesses and farms on their books.  On the other end, four giant banks: JP Morgan Chase, Bank of America, Citibank, and Wells Fargo - now comand $5.4 trillion in assets, or 40 percent of the total.  Given that they are nearly four times as large as all local banks combined, one might expect that they wouldhave made four times the small-business loans.  In fact, these banks have a mere $85 billion in small-business and farm loans on their balance sheets."  (p. 46 Yes Magazine Fall 2011)

Questions to ask yourself:

• Where do I want my money to be loaned?
• Who do I want to profit from the activities of my bank or credit union?

What can we do?

Hold the big national banks accountable by refusing to give them our money or our profits.

If I change where I deposit my money, what should I know?

There are many good credit unions and local community banks worthy of your money deposits. However, some community banks are in trouble from bad loans. (See http://www.kuow.org/program.php?id=17907). Credit unions who are part of a credit pool may also be experiencing some financial hardship. Before changing to a community bank or credit union make sure that it is not caught up in the present banking crisis. Whatever happens, your deposits are insured by the Federal Government.

Questions to ask banks and credit unions:

1. Where do you invest your customers funds?
2. Did you take bailout money?
3. Do you sell your loans or hold them? Do you consider the social and environmental impact of your loans?
4. Who gets profit from this bank or credit union?
5. Are your employees treated and compensated fairly? Is there diversity and inclusivity in the staff?
6. (If you’re asking a credit union): Who is allowed to join and do you participate in shared banking with other credit unions? Which ones?

Ways to check out your credit union

• Ways to check on credit unions you may be considering putting your money into: Washington State Chartered Credit Unions
• Northwest Credit Union Association
• To get the financial information about an individual credit union: National Credit Union Administration

Put your money where it will do the most good for your community! Bring your money home!

The Bank Bailout

These Banks have received TARP money but have also gotten trillions in loans at miniscule interest rates (.25 %) from the Federal Reserve and FDIC. Here is the list of companies that have sold preferred stock to the government under the TARP program, along with the amount of public money they received:

• Citigroup Inc. (New York) -- $25 billion
• JPMorgan Chase & Co.(New York) -- $25 billion
• Wells Fargo & Co. (San Francisco) -- $25 billion
• Bank of America Corp. (Charlotte, N.C.) -- $15 billion
• Goldman Sachs Group Inc. (New York) -- $10 billion
• Merrill Lynch & Co. (New York) -- $10 billion
• Morgan Stanley (New York) -- $10 billion

Source: http://bailoutsleuth.com/2009/01/citigroup-inc-new-york----1

Choose your bank carefully

WA has one of the highest rates in the nation of community banks under Federal regulation because of financial difficulty. See the article in the Seattle Times here.
To see a rating of the stability of all local banks go here.
Read here the Huffington Post article suggesting you move your money. They caught on to this great idea 6 months after we were promoting it but we are glad they are on board.

Our Review of Socially Responsible Investing Sites:

LONG-TERM INVESTMENTS:

• www.coopamerica.org or www.greenamericatoday.org (same organization and site. Co-op America recently changed it’s name to Green America.) — An excellent, wide-ranging, extensive website, a good place to start. –Click on social investing. –Site covers: “Overview/ what to know/ what we do/ community investing/ shareholder activism/ mutual fund performance chart/ FAQ. — Green America (and the Social Investment Forum, as described below) offers a booklet: “Guide to Socially Responsible Investing”.
• http://ussif.org/projects/  A good first stop for comparing all the funds. From the US Forum for Social and Responsible Investing  (formerly Social Investment Forum): This is an association of groups and individuals offering socially and environmentally responsible investing. 500 members: investment, management and advisory firms, mutual fund companies, research firms, financial planners, and credit unions. —Offers “Financial Services Directory” listing socially responsible financial planners, banks, and credit unions, mutual funds, and retirement options.” —Provides access to a lot of info on corporate governance and social and environmental issues. Also coordinates and funds original research projects on sri (socially responsible investing). —This website also offers a detailed “Socially Responsible Mutual Funds Chart: which rates over 100 sri mutual funds. (All funds listed are members of the Social Investment Forum.). Chart shows screens for “alcohol, tobacco, gambling, defense/weapons, animal testing, products/services, environment, human rights, labor relations, employment/equality”.http://ussif.org/resources/mfpc/screening.cfm  The screen following shows how much each fund made the previous year, etc. http://ussif.org/resources/mfpc/
• www.communityinvest.org (This site can also be found via the Green America and Social Investment Forum sites listed above.) —Definitely worth checking out. The Community Investment Center is “a joint project of the Social Investment Forum and Green America….putting money into underserved communities as an investment strategy that remedies economic disparity by providing lower-income people access to capital, credit, and training they otherwise would not have.” —Extensive info on what’s out there, performance, types of investments, rates of return, investment term, security, services provided to communities.
• www.selfhelp.org “Self-help is a community development lender that has provided over $5.6 billion in financing to over 62,000 home buyers, small businesses, and non-profits. Self-help reaches people who are underserved by conventional lenders – particularly minorities, women, rural residents, and low-wealth families – thru the support of socially responsible citizens and institutions across the U.S.” They offer competitive rates of return on federally insured savings and money market accounts, CD’s, and IRA’s. They use those dollars to fund mortgages, and small business loans to minorities, rural residences, and low-wealth families.
• www.trfund.com “ The Reinvestment Fund, launched in Philadelphia and described by Judy Wicks in her article “My Best Investments Are Down the Street” [Yes!magazine, Summer 2009] now serves communities all over the mid-Atlantic. A socially responsible alternative to the stock market, The Reinvestment Fund brings modest financial retuins to investors, and huge social returns to communities by supporting schools, housing, social services, clean energy, and small business.”

BANKS:

• www.commongoodbank.com
  “Seeks to create small, local, democratic banks that invest in the common good” with social missions in their community. A collaboration of many organizations led by “The Society to Benefit Everyone, Inc.”. —A well-designed site with interesting, wide-ranging proposals, FAQ. Worth reading.
• John Repp’s “A Washington State Bank for Sustainable Development”A comprehensive, public-private transformational proposal that addresses critical questions, connects financial, economic, and climate crises, and uniquely addresses the overall problems of debt and the creation of money.
• DAY-TO-DAY PURCHASESWhile understanding the preeminent value and necessity of rethink/reuse/repair/recycle, and making more of life by consuming less.

 

Micro Lending:

Dave Korten explains the confusing differences of opinion about whether micro lending is good or bad in his Yes! Magaine article Microcredit: The Good, the Bad, and the Ugly .