“Can A “Bank Fair” Be A Useful Tool For Increasing
Socially Responsible Banking?”
By Don Lathrop & Brian Trautman
15 August, 2012
Discerning shoppers pride themselves on getting a good deal. Yet for people who make decisions regarding their purchases and investments based primarily on principles of fairness and justice, the term “good” is not defined by how much money is saved or earned but by the degree to which a transaction is with a company that operates in a socially responsible and sustainable manner. The banking institutions with which we do business should be held to the same standard. Just as consumers want to know which car dealer is the most honest and which real-estate broker has the most integrity, folks also want to know, especially nowadays, which banking institution upholds the values that are most in line with their own.
It is very doubtful that anyone would mind conducting their banking transactions with George Bailey (as warmly portrayed by Jimmy Stewart in the film classic “It's a Wonderful Life”). And while there is no denying that Stewart's character was a bit idealistic, there surely must be a few banks like his in operation today. Unfortunately, in reality, far too many banks are run by the likes of Bailey's nemesis, Mr. Potter (Lionel Barrymore). In fact, since the repeal of Glass-Steagall in 1999, a number of the commercial banks of Mr. Potter's days have merged with investment firms that are led by speculators and hedgers like Gordon Gekko (a character in the film “Wall Street”), who famously proclaimed, “greed, for lack of a better word, is good. Greed is right, greed works."
The Occupy Wall Street movement has shown great energy in the streets with its efforts to build class solidarity and let lawmakers and corporations know of the massive disapproval of their activities by 99 percent of the population. The 2008 financial crisis and the Great Recession that followed cost tens of millions of Americans their homes, their jobs or their life savings. The devastating effects of this economic tragedy are as pervasive as they are entrenched, and continue to be felt across America, particularly by the most economically disadvantaged and vulnerable populations.
The birth of the Occupy movement was the result of an urgent need to end the neoliberal economic policies of the last three decades which are to blame for the “too big to fail” financial system and record economic inequality. The tactics of this nonviolent, people-powered movement have included physical encampments as well as other methods of nonviolent direct action, such as sit-ins, teach-ins, flash mobs, rallies, marches, etc. While these approaches should continue, a new activity can involve educating the public about the policies and practices of area banking institutions by occupying a bank or credit union from the inside. In this way, people will acquire the type and level of knowledge that can empower them to increase their level of social responsibility surrounding their money with respect to how and where it is located.
How can ordinary people who want to occupy a banking institution with their money discover one that would make George Bailey proud? This question and more was asked recently of area banking institutions by Berkshire Citizens for Peace and Justice (BCP&J) in an event we called a “Bank Fair.” BCP&J believed such an activity would be a fine way to let individuals in need of banking services have an opportunity to compare not only the variety of services offered by county institutions but to learn about the philosophies under which they operate. The Bank Fair was designed to determine 1) the types of products and services area banks and credit unions offer their customers and 2) the nature of their philosophy of operation from an ethical point of view.
As banking is the primary focus of economic power, we considered the Bank Fair to be just the sort of initiative that could provide individuals who were interested in moving toward a more just and equitable society the opportunity to move one step closer by becoming informed about how their choice of banking institution compared to competitors in the treatment of and commitment to customers, community, and the planet. In addition, the Bank Fair was an effort to assist each institution providing banking services in our local communities to make public its special qualities that help it retain its present customer base and encourage new depositors or borrowers.
Below is how we proceeded at BCP&J:
We began with securing an appropriate venue, plus the endorsement of seven area groups, and invited banking institutions located in our county to join us on a Saturday afternoon and set up tables with literature to market their various rates and services, branch and ATM locations, etc. We made the offer at no charge to them. We further indicated this was all they had to do to qualify to be part of this free advertising opportunity. At the same time it was made clear that participating institutions would have an equal amount of time to present their case to the audience for why any area resident would be best off depositing in or borrowing from their institution.
Our invitation further proposed that the participating institutions respond to diverse sets of questions that we thought the audience would be interested in having answered. The basic set of questions was largely of an operational nature, such as: What is the approximate ratio of your cash reserves to the amount of funds you have loaned out? How are your profits distributed? In other words, what percentage goes to stock holders (if you have them), to salaries, to bonuses, to charitable contributions, etc.? Are any "categories" of people excluded from potentially being hired by your firm? What is the ratio of the pay packages of those in your organization who receive the largest ones to those who receive the smallest? Which category of your employees has benefits? What is the nature of those benefits? Do you hold mortgages on homes whose resale value has significantly declined, through no fault of the owner, over the last few years? If so, have you been open to taking any action to offer relief to the borrower(s)? How much money does your institution give to support candidates for political office or to support political parties? Does your institution think it is desirable to reinstate the Glass-Steagall Act?
Beyond this, we proposed a second – and, in a way, a more significant – set of questions designed to assist members of the audience in clarifying their personal judgments about the extent to which each institution best addressed social justice concerns. We asked: Does your institution invest any of the funds deposited in any of your accounts in: Any firms that have, as a significant part of their business, production or services for the armed forces? This would be a feature of the military-industrial complex about which Eisenhower warned us. Any firms that run prisons for profit? Any firms whose profits, as far as can be known, come in a significant part from sweatshops? Any firms that are actually hedge funds? Any payday lending institutions? Any firms whose workforce is prevented from being union-organized? Any firms whose activities have caused major environmental damage? As this is no doubt difficult to define, we asked them to note any criteria they may use for judging such practices of firms in which they invest.
For another question, we asked if their institution donated funds to any charitable organizations, and more specifically whether they offer grants or other financial support to community organizations that work, at least in part, to change systems and/or structures that may be contributing to social inequality, racial injustice, environmental degradation, and the diminishment of the well-being of the clear majority of our citizens.
BCP&J marketed the Bank Fair to the public as a unique opportunity to learn more about the distinctions between the different financial institutions that are eager to have their money — the type of knowledge that we feel is essential when seeking to incorporate an ethical component and a maximum degree of social responsibility into personal banking practices. We also announced that there would be time set aside for an open discussion on how individuals and groups with strong concerns for social justice can be ever more effective, not only with their dollars but also with their time and talents.
Here is what we learned from our efforts:
Of the twelve banks invited, one bank no longer had an office in the county; we heard nothing from three banks; and we received a mysterious letter from eight banks. The letter contained no signatures, no contact information, and no return address. In their letter, the eight banks said in part: "We . . . believe that your event would not provide an appropriate venue for constructive dialogue. We are concerned that this event may only serve to confuse our local banks with Wall Street investment firms." We found that response bewildering. Answering the questions we put forward would certainly have been “constructive dialogue” from our point of view. Further, "Wall Street investment firms" seem all the more akin to our local banks given that these eight institutions declined to talk with an audience of individuals – some of whom were potential customers – asking highly-important-to-them questions of an ethical nature concerning these banks. Efforts were made to discover if two of the eight banks listed had actually intended to be included in the letter. However, we were unable to find out. This enigmatic letter was the subject of an editorial by a local weekly newspaper where the editor concluded that the "odd communal response" gave the Bank Fair "unusual political credibility for those of a like mind."
Of the five credit unions invited, only one participated. One was interested but so small they could not do so; one sent a letter describing the nature of their activities as a credit union but avoiding specific answers to the questions we posed; one seemed strangely unwilling to come after showing initial interest; and, the fifth one, farthest away, was never heard from.
The actual Bank Fair went very well. The one CEO who participated did a fine job of presenting the case for credit unions in general and answered all manner of questions of interest from the audience. However, only 30 people showed up, and though we had advertised extensively, it quickly became evident that many of those who were in attendance already understood the differences between banks and credit unions. We concluded that without competing institutions on hand, there was not such intense interest in the event when it finally materialized as we had hoped for. Still, on balance, the Bank Fair was a good experience for those who came and the questions were significant.
Our modest attendance by no means diminished the value of the event. What we found is that through their lack of cooperation most of the banks and credit unions in our county validated suspicions that they are averse to giving their depositors the kind of information that is needed to make moral decisions about whether or not their money might fund the kind of business interests they find unworthy of support. Hence, these institutions showed themselves to be interested in having our money, but unwilling to explain what is done with it. Without the Bank Fair, we would never have known, only guessed, about the profit-focused (as opposed to service-focused) nature of our area banking institutions.
Any reader who supports the objectives of the Occupy movement' might find a Bank Fair a great vehicle for raising public awareness about the policies and practices of their local banking institutions. Perhaps a Bank Fair would be a good idea to emulate in your area, whether you live in a rural county or a big city. This is a model we hope other groups will adopt, as we think this is a practical activity which will give ordinary citizens an opportunity to learn about their financial institutions and incorporate a social justice component into their banking practices.
About the authors: Don Lathrop is Professor Emeritus of Philosophy and Brian Trautman is an instructor of Peace and World Order Studies, a program concentration founded by Lathrop, at Berkshire Community College (BCC) in Pittsfield , MA . Don and Brian are members of Berkshire Citizens for Peace and Justice (BCP&J). To learn more about BCP&J, visit the group's website .
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