For the big money-center banks, the CRA is good deal. They pay some blood money into community banks and offload their low-income customers. Indeed, bank branches catering to the carriage trade often hustle would-be customers from housing projects out the door with an admonition to take their undesirable business to Lower East Side Peoples.
Goldman's circuits blew when the credit union's management appeared in Zuccotti Park to endorse Occupy Wall Street's call to "Move Your Money" from commercial banks to community credit unions. Heeding Peoples' and Occupy's call, 23 protesters marched to their local Citibank branches to close their accounts - and were promptly arrested.
Peoples' Chairwoman Deyarina Del Rio tells me that Peoples sees itself in agreement and alliance with the protesters' demands to radically shift the American finance system away from profit-first to people-first banking. But not with our money, seems to be Goldman's attitude. But of course, it's not Goldman's money but our money - effectively, the tax payer dollars that were supposed to come back in the form of loans in return for the Tarp bailout.
The billions of dollars in CRA funds (Citibank alone committed $115 billion over ten years) have given community banks tremendous political authority at the local level. Notably, Congresswoman Nydia Velasquez will be honored alongside Occupy Wall Street at the credit union's 3 November dinner. "We didn't mean to draw a line in the sand with Goldman," Peoples Chairman Del Rio told me, standing inside the bank's vault, the only place in the cramped back office with room to meet.
But Goldman did draw the line. And other bankers are stepping back across it, too. Capital One also pulled its name off the dinner invites.
Goldman has so far only passed out its legally-required CRA funds with an eye-dropper: the $5,000 for Peoples (now withdrawn), and a few other dabs here and there. The big cash investments from the Goldman fund are dangling, hoping to lure only those community banks and low-income funds that will dance to Goldman's tune. My sources told me that Goldman's "Urban Investment Group" representative had stated in a phone conversation that Occupy's credit union will never get another dime from any big bank, but, again, Goldman refused to speak with me to confirm or deny this.
Peoples' Del Rio dismisses such threats, but I don't. These Community Reinvestment funds ultimately come from public pockets, so why should the titans of Wall Street be allowed to bully community credit unions, which are answerable to their members, not Goldman's partners?
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