Sentient Times Feb/Mar 2010

It’s no secret that the most powerful banks on Wall Street, the same ones American taxpayers had to bail out, made record profits last year. They have also cut back on the money they are lending, even though the bailout was supposed to get credit flowing again. Meanwhile, community banks on Main Street have either closed down or are barely surviving.

Economist Robert Johnson, columnist Arianna Huffington and filmmaker Eugene Jarecki, among others, have come up with a new proposal that would allow ordinary people in this country to channel their anger over the bailout while also helping invigorate community banking. They’re asking people to move their money out of the largest banks in the country into local community banks. It’s called Move Your Money, and they’re promoting it with a short online video (www.moveyourmoney.info) that compares the current situation to the classic Frank Capra film It’s a Wonderful Life, where community banker George Bailey helps the people of Bedford Falls escape the grip of a predatory banker.

Amy Goodman spoke with Robert Johnson about their project on DemocracyNow! last January. A former economist at the Senate Banking Committee and the Senate Budget Committee, Robert Johnson is now the director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute. He also serves on the UN Commission of Experts on Finance and International Monetary Reform.

Amy Goodman: How did the “Move Your Money” project come about?
Robert Johnson: Came about at a dinner. Eugene Jarecki, my wife Alexis and Arianna and I were talking about how frustrated people were that there was no legislative reform and there was no—well, you might call “remorse” from the big bankers. So we started to just, how we say, bat the fat about what could be done. And we talked about how in past episodes people had sold stock, and in this episode, you could get people to move their money.

Why would they move their money when they’re happy with their services? Because they can get comparable services locally. Everything is insured by the Federal Deposit Insurance Corporation, up to $250,000. And they could stop this toxic side effect of derivatives lobbying and “too big to fail” lobbying that’s going on by the top five or six banks.

Which banks should they pull their money out of? And what banks should they put them into?
Citigroup, JPMorgan Chase, Bank of America, Wells Fargo and, to the extent that it’s asset management, Morgan Stanley and Goldman Sachs. Those are the six that have 97 percent of the derivatives markets. Those are the “too big to fail” institutions, or at least the large subset of the “too big to fail” institutions. But mostly, they’re the ones who are working very hard right now to stop Congress in the Senate from adequately reforming our financial system, which basically means they want to keep playing and making profit and have the taxpayer pick up the bill in the event of another—they hit another banana peel.

What are community banks?
Community banks are small, regional or very much local institutions. Most of their activities, their lending activities and so forth, relate to the local region or community around which they collect their deposits.

How do know if you’re moving your money into a bank that’s not owned by one of the entities you just talked about?
Well, that requires a little bit of research, but we do have friends at Institutional Risk Analytics that’s on the website, moveyourmoney.info, and they have rated all the FDIC call report banks, and they’ve separated out the big banks from the small, or what you might call the behind-the-scenes ownership, and given you a menu. If you plug in your zip code, it gives you a menu of the banks that they rate A or B, which is safe. And like I say, above and beyond that, you have deposit insurance. But those are the local banks that are independently owned, not owned by the big four to six.

What is a local credit union?
A local credit union is like a cooperative in the local community, where people put their money in and essentially they are the owners of that bank or of that financial institution. It’s not technically a bank.

I would guess some people might be afraid they’d somehow lose their money, that a lot of banks all over the country failed.
Yes, and yet no one lost any money for deposits under a quarter-million dollars. So I would say, for 95 percent of the population, if you have FDIC insurance at Bank of America or Chase, you also have it at your local community bank.

Your thoughts on the reconfirmation of Ben Bernanke?
My thoughts are that the Fed did not do a good job with regard to preventive medicine, diagnosis of the illness, diagnosis of the extent of the illness, that was called our credit crisis. Ben Bernanke, who I know personally, is a very intelligent man, but he’s embedded in a system whose incentives and governance is all about supporting the banks, rather than being focused on supporting the people who they represent.

What could the federal government do to encourage investment in local banks and community banks?
The federal government could be much tougher in its regulation, much tougher in the rule setting in Congress on these big banks and “too big to fail” banks. They’re subsidizing them enormously, which gives them a competitive advantage vis-à-vis the small banks. Their profitability is enormous. They can invest in all kinds of networks and other things that make it, well, you must say, easier, more convenient—with those subsidy profits and with the benefits of their lobbying efforts.

Do you think President Obama has improved the situation over President Bush, or do you think it’s gotten worse?
I would say it’s roughly the same, with one exception. I do think President Obama is not unmindful or reckless in his perceptions about what’s going on. I think that Bush was somewhat enamored of an unbridled free market fundamentalism that really isn’t based in reality.

Does the awareness translate into better action?
Not particularly.

This interview first appeared on Democracy Now! (January 4, 2010). This national, daily, independent, award-winning news program is hosted by journalists Amy Goodman and Juan Gonzalez and airs on over 800 stations. The largest community media collaboration in the US, it is broadcast on Pacifica, NPR, community and college radio stations; on public access, PBS, satellite television (DISH network: Free Speech TV ch. 9415 and Link TV ch. 9410; DIRECTV: Link TV ch. 375); and on the internet. Democracy Now! provides access to people and perspectives rarely heard in the corporate-sponsored media—independent and international journalists, ordinary people from around the world who are directly affected by US foreign policy, grassroots leaders and peace activists, artists, academics and independent analysts. View broadcasts online at www.DemocracyNow.org.

Amy Goodman

Buy Local – Buy Rogue!

The economic benefit of shopping at locally owned businesses is the focus of a new educational campaign in southern Oregon, Buy Local – Buy Rogue, which highlights the reasons to shop at locally owned businesses and helps consumers find the local products they need. With the global economy on shaky ground, there is no better time to encourage conscious consumers and local business owners to work collaboratively to put the power back into our community, building a healthy local economy.

“When you buy local, you are making a choice to keep your dollars here in the Rogue Valley where they will be reinvested in other local businesses. You are helping to create new jobs or simply maintain the jobs of your friends and neighbors,” says Tom Hammond, Owner of Southern Oregon Brewing Company, and Buy Local – Buy Rogue member.

Numerous studies have shown that shopping at locally owned stores keeps more money in the local economy than shopping at a chain store or stores with corporate headquarters out of the region. Our one of a kind Buy Local – Buy Rogue businesses are an integral part of our distinctive regional character. The unique character of our valley is what brought us here and will keep us here and keep visitors coming back. A local economy of diverse, unique businesses also attracts today’s skilled workers and investors who can choose to settle and grow businesses anywhere.

The new online business directory at www.buylocalrogue.org makes it easy for consumers to find these locally owned businesses so you can make educated decisions about where you invest your money—whether that’s opening an account at a locally owned bank or buying a loaf of bread. The directory currently features over 100 food businesses and will expand to other businesses in the coming months.

Research on the benefits of Local First campaigns show that they effectively increase market share for independent business. A national survey of holiday shares last year showed that independent retailers in cities with active “Buy Local” campaigns reported much stronger holiday sales than those in cities without such campaigns.

Buy Local – Buy Rogue is a not for profit alliance of locally owned, independent businesses committed to building a more socially, environmentally and financially sustainable economy in the Rogue Valley. The business network supports the mission of THRIVE (The Rogue Initiative for a Vital Economy) to educate businesses about sustainable business practices and the public about the benefits of using their purchasing power locally. The Buy Local – Buy Rogue campaign is a member of BALLE (Business Alliance for Local Living Economies), a national network of socially responsible businesses committed to fostering vibrant communities, a healthy environment and prosperity for all.

Buy Local – Buy Rogue invites any locally owned, independent business to join this campaign and receive branding as a locally owned business including a “Thank You for Choosing this Locally Owned Business” window decal, marketing materials, listing on the www.BuyLocalRogue.org website and networking events throughout the year.

Businesses that join the Buy Local – Buy Rogue campaign are locally owned and interested in learning more about how they can better support their employees, the community and better protect the environment. If you are a business interested in joining, please visit www.buylocalrogue.org or call (541) 488 7272. Consumers can support the sustainable business practices of our Rogue Valley businesses by buying looking for the label and buying local first.

“The purchasing power consumers in the Rogue Valley have to decide the future of our community is incredible,” said Wendy Siporen, campaign director. “We all have an opportunity, every single day, to essentially vote with our dollars. When we purchase from local business, we vote for a locally controlled economy that works for our community, our environment and our wallets.”

Local Banks and Credit Unions
Support Our Communities

Are you angry about Wall Street’s reckless excesses? Are you disappointed with President Obama’s limp approach to reform? You can change this, acting individually and collectively. Withdraw your deposit and savings accounts from the large banks that brought the system to ruin and were subsequently rescued with billions in government bailouts. Put your money instead in smaller, safer banks or credit unions closer to home—the thousands of community institutions that do not harvest their profits from greed and recklessness

“Move Your Money” is an electrifying slogan that’s lighting up the Internet because it shows people how they can push back against the big dogs of banking. The concept is simple, but this is a big idea that could alter the timid direction of financial reform.

This campaign is potentially more than a feel-good gesture. If coordinated with institutional reform efforts, it could lead to a broad rebellion against the financial system, with citizens reclaiming the power to act directly when politicians are too intimidated by moneyed interests to act in the public interest. Economist Jane D’Arista put it crisply: “We are not a nation of widows and orphans. We have quite a lot of money, and people control some of it. They might ask why they don’t control more of it.”

The campaign was launched just before New Year’s Eve by Arianna Huffington of the Huffington Post and Rob Johnson of the Roosevelt Institute. An influential bank-rating firm, Institutional Risk Analytics (IRA), donated a website window (moveyourmoney.info/find-a-bank), where citizens can find banks in their ZIP code that IRA certifies as safe and sound.

In the first forty-eight hours more than 100,000 responded with inquiries. Within a week, people had searched for good banks in 16,631 ZIP codes—nearly 40 percent of the nation. The search tool is now getting 45,000 users a day. Naturally, the corporate media promptly assured readers that “ordinary Americans lack the power to hurt the big banks,” as a Washington Post headline put it.

Wrong. The cynics either do not understand banking or misunderstand the widespread public anger. Dennis Santiago, IRA’s CEO and managing director, explained that banks compete fiercely for the “core deposits” provided by individual and small business accounts—this stable money is their preferred base for profitable lending. Take away core deposits, and bankers feel immediate balance-sheet stress. Expand the account base for community banks, and they gain greater stability and greater lending power. “Will moving your money have an effect?” Santiago asked. “And by effect, I don’t mean making a momentary political statement. I mean making a structural difference to the country’s financial system. The answer is yes.”

Structural change ought to be the primary goal of financial reform—breaking up the concentrated power held by mega-banks and creating a balanced system of smaller, more diverse lending institutions that thrive by serving local credit needs. Alas, the Obama administration and Congress are pursuing the opposite goal—rescuing the behemoths that failed and encouraging even greater financial concentration. This will lead to more reckless adventures, more “too big to fail” bailouts.

“Move Your Money” is an important model for teaching people how to change a dysfunctional system. The same principle of taking control of your own money is at work in related reform movements. A campaign launched by faith-based community organizations associated with the Industrial Areas Foundation identifies sky-high interest rates on credit cards and other lending as the ancient sin of usury. IAF groups are asking churches, foundations and local governments to withdraw funds from the usurious banks that profit by destroying borrowers. Organized labor, likewise, has launched an aggressive movement to insist on responsible investing values for the pension-fund wealth of working people, urging state treasurers and fund managers to invest for society’s interests as well as good returns.

Changing the nature of finance capitalism is a long road, to be sure, and the industry will resist change every step of the way. But the fight begins in earnest when people decide to move their money.
- The Nation Editorial, January 14, 2010