Hate your bank?


Banks have been in the news a lot since the Wall Street meltdown of
2008. States across the nation have had to take massive budget cuts,
national spending nearly halted, and people started losing their homes.
Small businesses were denied loans necessary for successful startup and
expansion. The list goes on. Chase and others have recently come under
fire for foreclosing on homes, prompting substantial analysis of our
nation’s financial system. Everyone can point to the problem, but few
are pointing to a possible solution: banking locally. The benefits that
individuals can make by simply switching from a national chain to a
community (local and independent) bank or credit union are numerous, but
infrequently discussed.

The Boulder County Independent Business Alliance (BIBA) is
spear-heading a local movement to help offset the damage we’ve suffered
economically. The “Move Your Money” campaign is an effort to get Boulder
residents to switch from national banking to a more stable institution.
The campaign has already begun, but the major effort will be launched
the first week of June, in alliance with several community banks and
credit unions.

It is sad to note how little time our education system — at any level
— devotes to economics and financial understanding, especially to
personal finance topics. This lack of information compounds the public’s
misunderstanding of the nature of our banking system, and only recently
have we seen the results of this lack of knowledge.

There are some subtle differences between credit unions and banks,
but the underlying distinction between a local institution and an entity
like Bank of America is huge, says LeAnn Faulkner of the Boulder Valley
Credit Union.

“Credit unions are democratically operated,” Faulkner says. “Members
are part-owners that have a voice in the direction of the credit union
via an elected, volunteer board of directors.”

Being a member of a credit union or community bank allows for greater
control of your assets. You can control how and where your money is
invested. This has prompted a surge of socially conscious banking
endeavors, like the New Resource Bank in San Francisco. They do not loan
money to tobacco, oil or weapons-related industries. If you want to
know where small banks and credit unions invest your money, just ask

After three years of continued pressure, “Bank of America, Citi,
Morgan Stanley, Credit Suisse, JPMorgan Chase and Wells Fargo have
successively passed public policies limiting their financial
relationships with coal operators that practice mountaintop removal
(MTR) coal mining,” according to the Rainforest Action Network.

Unfortunately, this change in policy was the result of self-interest
sensibility — not necessarily because it was the right thing to do.

“Money talks — and it is saying loud and clear that mountaintop
removal coal mining is a bad investment,” says Rebecca Tarbotton,
executive director of the Rainforest Action Network. We need banks that
are more in-line with our ethical values, and can make decisions

In addition to the global benefits of banking locally, there is also a
personal incentive to switch. Not only do you receive more personal,
enhanced customer service, but you save more money.

The general sentiment around national banks has always been “Bigger
is better.” Not so, anymore. Although there is much debate regarding how
big an institution must be before its efficiency begins to plummet (and
customer fees skyrocket), the estimated average is $500 million in
assets. Many of us think that bigger means better, but with banks, it is
usually the opposite. The bigger the bank, the bigger the fees
associated with our ATM cards and checking accounts. Big banks have a
bloated infrastructure that actually increases costs on the user end.
Many credit unions have ATM surcharge-free networks with fewer penalties
against your hard-earned cash.

One other essential thing to consider when choosing between the big
bank and the small bank is the economy as a whole. In addition to fiscal
responsibility — and a little extra cash for you — local banks and
credit unions also enjoy more fiscal stability because they’re not
involved in credit-default swaps or derivatives. Depending on their
charter and licenses, some local banks and credit unions cannot even buy
stock, which means they avoid making risky investments with your money.

Moreover, Stacy Mitchell, a researcher with the New Rules Project and
author of Big-Box Swindle, argues that local banks and credit unions
are “the engines of small-business lending.”

“Most community banks concentrate their lending efforts in their own
markets,” says Richard Hofstetter, president and CEO of Lighthouse Bank
in Santa Cruz.

“Community banks … take deposits from their local community and
reinvest them, in the forms of loans, back into their local
communities,” Cruz says, a stark contrast to larger banks, who denied
loans to small businesses following the $700 billion bailout.

Looking at Boulder, a vibrant hub of alternative energy
manufacturing, tech development and natural products sales, the
community’s efforts have thrived because we support a strong and
prolific network of locally owned and independent businesses. We can add
to our already strong local economy, and do even better, by banking

When you invest in a local bank or credit union, you are helping to build a better community.

For more information on how to get involved with BIBA’s mission, sign
up for updates, as well as find links to convenient “switch kits” (a
five-step process to transfer all your savings and loans, effortlessly),
visit www.boulderindependentbusiness.org.