Citi’s Sandy Weill Now Sees Problems with Banks Too Big to Fail

In what the Huffington Post today called “a stunning reversal,” Sandy Weill, the former Citigroup CEO, now believes that the mega-banks need to be broken-up into smaller banks for the financial system to work properly.

Now that vast sums have been lost, people’s lives impoverished, and legislative efforts to better regulate banks have been weakened, Weill, the long-time champion of the “too big to fail” system says “What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, and have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”

This comes years too late, of course, following economic devastation for many and ridiculous levels of wealth-building for the few.

But it’s still a good time to break-up with your mega-bank if you are using one – and to switch to a community development bank or credit union. Pledge to move your money – and find new banking options – at www.BreakUpWithYourMegaBank.org  You’ll be glad you did!

Rep. Waters Is Right: Wall St. Needs to Support Financial Reform

Following the JP Morgan debacle in which $2 billion, no wait, $3 billion has been lost due to risky bets, Representative Maxine Waters (D-CA) makes the following requests of all financial industry executives in a recent blog posting:

  • Stop undermining the Dodd-Frank legislation
  • Stop pressuring regulators to weaken rules
  • Publicly declare support and full funding for the SEC and the Commodity Futures Trading Commission so they can exercise needed oversight

She notes that “big banks will fight against regulation, even when it is in their own best interests.” How true….and how dangerous.

Leave your big bank today: www.BreakUpWithYourMegaBank.org

 

$26 Billion Settlement With Mega-Banks

Attorneys General from all 50 states recently announced a $26 billion settlement with the largest home mortgage servicers in the nation – Bank of America, JP Morgan Chase, Citigroup, Ally Financial and Wells Fargo (all which qualify for our Mega-Bank Hall of Shame) – for improper foreclosure practices.  While $26 billion sounds like a lot of money, it is a drop in the bucket compared to the fact that Americans collectively owe $700 billion more on their mortgages than their homes are now worth.  In addition, the banks can use the funds to write-down bad mortgages (which they might have done anyway).  Also, while some homeowners will see a bit of relief from the settlement (and some of the worst foreclosure practices will be curbed), millions of homeowners will still face foreclosure in the years to come.  Considering the massive harms that mega-banks caused, and the ongoing harms that resulted, the settlement starts to look puny.

More needs to be done to expose fraud in the banking industry, to hold the responsible executives accountable, and to help homeowners whose lives are being wrecked by the foreclosure crisis.  As a consumer, you can play your part by closing your accounts with mega banks and shifting your funds to community development banks and credit unions instead.  Take action with our Break Up With Your Mega-Bank campaign (www.BreakUpWithYourMegaBank.org) today, and start using your savings to build communities that mega-banks so callously wrecked.

7 Ways to Cheat on Your Mega-Bank

So, you’ve been wanting to end your relationship with your mega-bank, but you can’t break up just yet. While you work toward making a clean break, we’ve got some suggestions for how you can “cheat” on your mega-bank: ways you can move money into banking products from community development financial institutions (CDFIs), even if you’re maintaining a primary bank account elsewhere.

1. Savings accounts — No matter where you keep your primary checking account, you can open up a savings account with a community development bank or credit union anywhere in the country. Many CDFIs offer online banking services, so consider shopping around for a bank or credit union that matches your values best.

2. IRAs, Roth IRAs, Education Savings Accounts, and money-market accounts — For your education, retirement, and other specialized long-term savings needs, these common types of savings accounts can be found at many, but not all, community development banks and credit unions. Be sure to roll over IRAs from your mega-bank to your new community development bank or credit union without taking money out to avoid any tax liabilities. Be aware that money market savings accounts often require a relatively high minimum balance, and offer relatively high rates of return, based on current interest rates. Continue reading “7 Ways to Cheat on Your Mega-Bank”

Mega-Bank Hall of Shame: First Inductee Citigroup

We have many Halls of Fame in the US: every sport has one and there’s one for rock and roll. However, sometimes we need to “honor” those who are the worst of the worst, to call attention to their abuses and hopefully get them to change course while getting people to consider alternative.  In those cases, we need a Hall of Shame.  Based on its proven capacity to do harm to the United States and the world, we think no industry deserves a Hall of Shame more than banking.

As part of Green America’s Break Up With Your Mega-Bank Campaign, we’re now launching the Mega-Bank Hall of Shame.  We’ll be periodically adding financial institutions to the list and taking nominees from readers.  We’re launching the Hall of Shame with Citigroup, one of the largest banks in the world.

What qualifies Citigroup for the Hall of Shame?  Here’s a partial list of their actions that we think merits their inclusion.

Predatory Lending Practices.  For the past decade, there have been multiple allegations of predatory lending practices by Citigroup.  Predatory lending is financing that saddles borrowers with exorbitant interest rates and fees and unfair terms.  The result is the stripping of wealth from low-income communities.  In 2001, Green America and the Social Investment Forum called attention to Citigroup’s predatory lending practices a decade ago and an outcry from thousands of consumers got Citigroup to clean up some of its worse practices.  In addition, the Federal Trade Commission sued Citigroup for predatory lending practices and settled with the banking giant in 2002 for $215 million. However, as late as 2009, data analyzed by Fair Finance Watch found that Citi, and three other major lenders (JP Morgan Chase, Wells Fargo and Bank of America) were still saddling minority borrowers with higher cost loans, while also turning them down for loans more frequently.

High Fees.  Citigroup and other major banks keep coming up with new fees for many of its account holders.  Most recently, in December 2011, Citigroup raised its fees on a basic checking account.

Illegitimate Foreclosures.  Citigroup is one of the banks that is being sued by Massachusetts and other states for engaging in improper foreclosures against homeowners.  A key claim of the lawsuit is that Citigroup and other banks used “robo-signers” in foreclosing on homeowners and failed to perform due diligence.  In addition, Citigroup and other banks are alleged to be improperly foreclosing on US Service Members.

Abusing Investors.  The Securities and Exchange Commission (SEC) sued Citigroup for lying to investors about the soundness of its investment products.  Citigroup was allegedly telling investors that the investments were sound, while betting against the same investments.  According to the filed complaint, Citigroup made $160 million, while investors lost $700 million.  The SEC recently tried to settle this case, but the presiding judge refused to sign off on the settlement, essentially saying that the SEC was letting Citigroup off too easily.  The Federal Housing Financing Agency is also suing Citigroup and 16 other lenders for misleading Fannie Mae and Freddie Mac about the safety and soundness of mortgages the entities purchased from Citigroup.

Gender Discrimination.  A group of woman plaintiffs is suing Citigroup for allegedly laying off female employees disproportionately, retaining men with lower performance evaluations, and/or treating women to a hostile environment.

Fostering Climate Change.  As I wrote in a previous post, Citigroup is one of our major banks that claims to screen its lending for climate change issues, but continues to be a major supporter of sources of  climate change.

The bottom line:  if you are a person of color, a woman, a moderate-income account holder, an investor, or someone who cares about people and the planet, then Citigroup is not the bank for you.  If you bank with Citigroup, check out Green America’s Guide to Community Investing to find financial institutions that build communities and treat their customers well.  If you need help in breaking up with Citigroup, you can download our free kit.

If you break up with Citigroup, please share your experience on our blog.  And, if you have more to say about Citigroup than what you see above, please share it.

10 Reasons to Break Up With Your Mega-Bank

1.      You want to support small, local, US businesses — The New Rules Project reported in 2010 that the 20 biggest banks “devote only 18 percent of their commercial loan portfolios to small business,” despite the clear need to spur small-business growth to jump-start our economy.

2.     You don’t want your money paid out as a fat bonus for a CEO – While most of us continue to feel the effects of the 2008 global economic downturn, mega-bank CEOs as a group have seen their pay skyrocket back to 2008 levels and higher. The same banks that took billions of dollars in taxpayer bailouts promptly rewarded their highest-paid employees with bonuses. The Financial Times reports that big-bank CEO pay rose 36 percent in 2010, while average workers in private industry saw their pay rise only 2 percent.

3.      You don’t want to fund climate change.  — A recent report from BankTrack.org entitled Climate Killers finds that JPMorgan Chase, Citi, and Bank of America led banks worldwide in financing coal since 2005.  Continue reading “10 Reasons to Break Up With Your Mega-Bank”

GreenChoice Bank (our February green-biz interview)

The Green Exchange headquarters, slated to become the first LEED Platinum community bank location in the Midwest

When you make a deposit with your bank, your money doesn’t just sit there. The bank invests your money as they see fit, primarily by making loans, but the decisions on how to invest your money, with whom, and for what purpose, are made by each bank.

“GreenChoice Bank invests its customers’ deposits back into the local and sustainable business community, to support entrepreneurs who are creating jobs and to fund sustainable construction projects,” says Steve Sherman, chief operating officer of GreenChoice Bank. GreenChoice Bank is one of many community banking options that can help you steer your money toward projects you believe in.

We asked Steve to tell us more about GreenChioce’s LEED-certified buildings, 100-percent recycled debit cards, and how a Bank-of-America-takeover inspired his move toward a greener career choice…