Written
for Alternet as part of a five-part series titled "New Economic Visions".
According to both the Mayan and Hindu calendars,
2012 (or something very close) marks the transition from an age of darkness,
violence and greed to one of enlightenment, justice, and peace. It's hard
to see that change just yet in the events relayed in the major media, but a shift
does seem to be happening behind the scenes; and this is particularly true in
the once-boring world of banking.
In the dark age of Kali Yuga, money rules; and
it is through banks that the moneyed interests have gotten their power.
Banking in an age of greed is fraught with usury, fraud, and gaming the system
for private ends. But there is another way to do banking, the neighborly
approach of George Bailey in the classic movie "It's a Wonderful Life."
Rather than feeding off the community, banking can feed the community and local
economy.
Today the massive too-big-to-fail banks are
hardly doing George Bailey-style loans at all. They are not interested in
community lending. They are doing their own proprietary trading--trading
for their own accounts--which generally means speculating against local
interests. They engage in high-frequency program trading that creams
profits off the top of stock market trades; speculation in commodities that
drives up commodity prices; leveraged buyouts with borrowed money that can
result in mass layoffs and factory closures; and investment in foreign
companies that compete against our local companies.
We can't do much to stop them. They've got
the power, especially at the federal level. But we can quietly set up an alternative model,
and that's what is happening on various local fronts.
Most visible are the "Move Your Money" and
"Occupy Wall Street" movements. According to the website of the Move Your Money campaign,
an estimated ten million accounts have left the largest banks since 2010.
Credit unions have enjoyed a surge in business as a result. The Credit
Union National Association reported that in 2012, for the first time ever,
credit union assets rose above $1 trillion. Credit unions are non-profit,
community-minded organizations with fewer fees and less fine print than the big
risk-taking banks; and their patrons are not just customers but owners, sharing
partnership in a cooperative business.
Move
"Our" Money: The Public Bank Movement
The Move Your Money campaign has been wildly
successful in mobilizing people and raising awareness of the issues, but it has
not made much of a dent in the reserves of Wall Street banks, which already had
$1.6 trillion sitting in reserve accounts as a result of the Fed's second round
of quantitative easing in 2010. What might make a louder statement would
be for local governments to divest their funds from Wall
Street, and some local governments are now doing this. Local governments
collectively have well over a trillion dollars deposited in Wall Street banks.
A major problem with the divestment process is
finding local banks large enough to take the deposits. One proposed
solution is for states, counties and cities to establish their own banks,
capitalized with their own rainy day funds and funded with their own revenues
as a deposit base.
Today only one state actually does this, North
Dakota. North Dakota is also the only state to have escaped the credit
crisis of 2008, sporting a sizeable budget surplus every year since. It
has the lowest unemployment rate in the country, the lowest default rate on
credit card debt, and no state government debt at all. The Bank of North
Dakota (BND) has an excellent credit rating and returns a hefty dividend to the
state every year.
The BND model hasn't yet been duplicated in
other states, but a movement is afoot. Since 2010,
18 states have introduced legislation of one sort or another for a state-owned
bank.
Values-based
Banking: Too Sustainable to Fail
Meanwhile, there is a strong movement at the
local level for sustainable, "values-based" banking--conventional banks
committed to responsible lending and service to the local community.
These are George Bailey-style banks, which base
their decisions first and foremost on the needs of people and the environment.
One of the leaders internationally is Triodos
Bank, which has local offices in the Netherlands, Belgium, the United Kingdom,
Spain, and Germany. Its website says that it makes Socially Responsible
Investments that are selected according to strict sustainability criteria and
overseen by an international panel of "stakeholder" representatives
representing various community, environmental, and worker interest
groups. Investments include the financing of more than 1,000 organic and
sustainable food production projects, more than 300 renewable energy projects,
33 fair trade agricultural exporters in 22 different countries, 85 microfinance
institutions in 43 countries, and 398 cultural and arts projects.
Two U.S. banks exemplifying the model are One
PacificCoast Bank and New Resource Bank. Operating in California, Oregon and
Washington, One PacificCoast is comprised of a sustainable community development
bank with around $300
million in assets and
a non-profit foundation (One PacificCoast Foundation). Its commercial
lending business focuses on such sectors as specialty agriculture, renewable
energy, green building, and low-income housing. Foundation activities
include programs to "help eliminate discrimination, encourage affordable
housing, alleviate economic distress, stimulate community development and
increase financial literacy."
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