Think Local: Move Your Money

By Chris Hoffman

(Sheburne, NY) The Community Banking Initiative of the New Rules Project, a program of the Institute for Local Self-Reliance, reports that the network of community-based financial institutions originally implemented and historically supported by both state and federal policies since the 1930s has been systematically dismantled, beginning in 1980, by Congress and federal regulators. As a result, four of the largest banks – Citigroup, JP Morgan Chase, Bank of America, and Wells Fargo – now control half of all bank assets in the country and hold 40 percent of all deposits. In New York State, large banks hold 79 percent of all deposits.

The market crash of 2008 was, simply put, a direct result of huge financial and banking institutions speculatively gambling with our money in ridiculously complex and nonsensical ways that had virtually nothing to do with serving local communities and everything to do with making obscene amounts of money for their top management, no matter who or what got ruined in the process.

However, there are almost 16,000 small community banks and credit unions in the country that exist to service the financial needs of their local communities and that did not engage in the unethical practices that nearly crippled the global economy (and may still). These small institutions are the focus of a national, mostly unorganized, volunteer movement called Move Your Money, which encourages people to take their money out of the “too big to fail” banks (the four above plus Goldman Sachs and Morgan Stanley) and put it instead into community banks. The Independent Community Bankers of America describes community banks as “focusing on the needs of local families, businesses, and farmers” and “making loans to the neighborhoods where their depositors live and work.”

Bankfox.com rates community banks based on an analysis of data (such as annual return on assets, ratio of equity and reserves to assets, and percentage of overdue loans) reported by the FDIC and other public sources. Their website allows you to search by zip code, which I did and learned that, as of Dec. 31, 2009, most of CNY’s community banks scored 3 or higher, with Rome Savings Bank receiving the highest possible score of 5.

The New Rules Project and its Community Banking Initiative seeks to “provide the empirical and conceptual underpinnings for a community-scaled financial system, which will reduce systemic risk and strengthen local economies, and to identify public policies that can revitalize such a system.” Most community banks offer debit cards, online bill payment, wire transfers, overdraft lines of credit, and credit cards, as well as a local network of ATM machines. The FDIC now insures financial institutions of all sizes, and credit unions are backed by the National Credit Union Share Insurance Fund. Most community banks and credit unions offer both secured and unsecured loans and mortgages, many at better rates and with fewer fees than large national banks. In other words, there is no good reason to throw your money on the Wall Street craps table when it could be working instead to grow the community where you live.

It’s that simple. Community banks were not the culprits in the recent Wall Street swindle. We should reward our local banks with our business, and shun the likes of Bank of America and Wells Fargo by taking our money and going home.

Chris Hoffman lives in the village of Sherburne in her 150+ year-old house where she caters to the demands of her four cats, attempts to grow heirloom tomatoes and herbs and reads voraciously. She was instrumental in defeating NYRI’s power lines through her work with STOP NYRI, Inc., and passionately pursues various avenues with like-minded friends to preserve and protect a sustainable rural lifestyle for everyone in Central New York.

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Think Local: Move Your Money

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