Why a Central Banking System Doesn’t Work for Everyone

Green America’s Take Charge Program urges consumers to support smaller, local financial institutions in lieu of megabanks. Here are a few reasons why local banks and credit unions benefit smaller communities across the country.  Since the early 20th Century, The United States has relied heavily on its centralized banking system. Represented by the Federal Reserve and top-tier financial institutions, (such as Citi and Bank of America), a centralized system is one in which a single entity regulates a state’s currency, money supply, and interest rates. The Federal Reserve has many responsibilities, including regulating and supervising private banks, protecting the credit rights of consumers, and issuing the nation’s currency. The role of large, wealthy private banks is important in understanding how the central banking system works. The Fed is not controlled by the government, but rather by a group of governing board members who are often employees of private megabanks. Private banks give the board information related to their particular economic situation, and Federal Reserve policy is based on their suggestions. In turn, Federal Reserve policy largely influences to whom, and by how much banks should lend their money. The centralization of banking benefits wealth concentration and increases risks Research suggests that “high-ability entrepreneurs” tend to gravitate towards a central banking system. Essentially, wealthy individuals and institutions enjoy the connectedness that a centralized system offers. Pooling together the resources of powerful entrepreneurs, however, increases the risk of losing all of that […]

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Bank of America Announces a New Plan for Taking Money from Those Who Can Least Afford It

Recently, Bank of America announced a new debit card where card holders will be charged $4.95 per month for overdraft protection.  The pitch to cardholders is that if they overdraw their accounts they will not rack up sizable overdraft fees.  On the surface, this might sound like a good deal to people who keep a low balance in their account and worry about accidentally triggering overdraft fees. But, the reality is quite different.  That’s because bank customers can’t overdraft their accounts unless they opt in for overdraft protection.  Gone are the days when banks could opt you in (without your knowledge) for overdraft protection  and then charge you hefty fees ($35 per overdraft)  for going pennies below your balance when you use your debit card. Allowing unaware customers to overdraft their account and then forcing them to pay $35 for this “privilege” mobilized consumers and their advocates to press for reform.  Thanks to banking reform legislation passed in 2010 (which Green America and its members supported), bank customers have to opt-in for overdraft protection.  If they don’t opt-in for the protection, and they attempt to overdraft their account, their card is simply rejected and no fee is charged.  Unfortunately, many consumers don’t understand this.  A 2011 survey of consumers who opted in for overdraft protection found that 66% of them mistakenly signed up for the service because they thought that if their debit card was rejected for trying to make […]

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This Valentine’s Day: Ditch a Megabank Zero and Take Up With a Hero

Valentine’s Day is a time to celebrate the ones we love.  But what if your love is one-sided and you are on the losing end?  If you are giving your hard-earned dollars to a megabank – such as Citi, Bank of America, Chase, Wells Fargo – you might want to look at ending your relationship soon.  Ask yourself these questions: Do you want to be in a relationship where your partner abuses the planet?  If not, you should be aware that Citi, Bank of America, and Chase are all major funders of coal mining and coal-fired power plants. Do you want to be in a relationship where your partner rips you off?  If not, you should know that all the major banks and credit card issuers have been sued by federal and/or state authorities for abusive mortgage, credit cards, or other products.  And, big banks keep looking for ways to pile on fees. Do you want to be with a partner that has a total disregard for others and takes no responsibility for its actions?  Chase, Wells Fargo, Citi, and Bank of America were all involved in fomenting the mortgage crisis that crashed the economy in 2008. They gambled with our money and then made us bail them out. It can be hard to leave a long-term relationship.  You get used to a bank and think that it will be a big hassle to change, or you’ll lose out on […]

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Finally – Debt Trap Payday Loans from Banks on the Way Out!

There’s good news for the longer term financial well-being of cash strapped individuals. Several major banks targeted by Green America and our allies – Wells Fargo, Regions Financial, US Bank and Fifth Third – are all phasing out short term loans that have had interest rates of up to 365%. These loans, known as “deposit advance loans” or more commonly as “payday loans” have trapped people in ongoing cycles of debt resulting in ever more borrowing. Last spring Green America wrote to the Office of the Comptroller of the Currency (OCC) and to the Federal Deposit Insurance Corp. (FDIC) calling attention to the problem of bank payday loans. This product is exploitative when offered by storefront payday lenders, and no less exploitative when offered by a bank. Green America was pleased that the Comptroller of the Currency Thomas Curry went on record saying: “We have significant concerns regarding the misuse of deposit advance products.” Similarly, when financial regulators issued new proposed guidance on bank payday loans, FDIC Chairman Martin J. Gruenberg stated that: “The proposed supervisory guidance released today reflects the serious risks that certain deposit advance products may pose to financial institutions and their customers.” Research from the Consumer Financial Protection Bureau found that more than 50% of bank payday loan borrowers took loans totaling at least $3,000 and of these borrowers, more than half paid off a loan only to take out another loan within just 12 days. […]

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Take Charge of your Card – Switch to a Credit Card that Supports People & the Planet

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Today, Green America is proud to announce our newest campaign:  The “Take Charge of your Card” campaign urges consumers to move their money away from mega-banks with questionable environmental practices, restrictive fees and interest rates, and outlandish executive compensation and into smaller community development banks and credit unions. One of the best ways to remove support from banks that fail […]

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Q: What happens when a mega-bank is late with a payment?

A:  They receive a nice letter politely asking that they “use maximum discretion and effort” to meet their obligations. Shame on Wells Fargo, Bank of America, Citibank, and JP Morgan Chase, who are reported to be sitting on $130 million worth of insurance payments due to victims of Superstorm Sandy.  Imagine if the banks’ customers could respond to the mega-banks with the same late fees and compound interest that mega-banks demand of their customers who are late with payments far smaller than $130 million!   It’s just one more reason to Break Up With Your Mega-Bank. From CNN: “Families need to be able to return to their homes and the state economy, which took a hit from Superstorm Sandy, needs the boost from spending on repairs,” Cuomo said in a written statement. “After insurance companies have sent homeowners checks to pay for repairs, the money should not be sitting with the bank because of red tape.” The state’s Department of Financial Services found that four of the biggest U.S. banks — Wells Fargo, Bank of America, Citibank and JP Morgan Chase — are holding more than 4,100 checks worth more $130 million. The banks were not immediately available for comment, though have maintained that they were socked with a massive amount in payouts that require processing in the wake of the storm.

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Growth in Socially Responsible Investing & Banking

A new report by US SIF, the association for socially responsible investment (SRI) professionals and institutions, shows that assets in SRI continue to rise in the United States. More and more investors are clearly realizing that their long-term financial well-being is best served through investments in companies that pay attention to their social and environmental impacts and that have sound corporate governance. Likewise, use of banks and credit unions dedicated to community development is also on the rise. These are great signs for moving our economy in the direction needed! The new research tracks an increase of 22% in SRI from 2009 to 2011, bringing professionally managed SRI assets to in the US to $3.74 trillion as of December 31, 2011. The findings, announced yesterday in the 2012 Report on Sustainable and Responsible Investing Trends in the United States, indicate that SRI now constitutes 11.23% of all US, professionally-managed assets. Significantly, community development banks showed an increase of 74% and community development credit unions showed an increase of 54%. If you have not yet switched to a community development bank or credit union – now is the time to join the increasing number of people using financial institutions that support people and the planet! Visit www.BreakUpWithYourMegaBank.org for tips on how to “break up” with your conventional bank and find a better bank that meets your needs while supporting communities from coast to coast. We’ve added even more banking options to […]

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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!

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Chase and Wells Fargo: giving you more reasons to break up

This week, megabanks gave their customers yet more reasons to break up with them and support community investing institutions instead. JP Morgan Chase CEO Jamie Dimon answered questions in front of the Senate Banking Committee yesterday, and admitted that his bank made mistakes regarding billions of dollars of losses from trades.  Dimon has even admitted that some of the activity involved may have been illegal.  The Senate Banking Committee unfortunately went pretty light on Mr. Dimon.  That’s a shame, because as Richard Eskow points out in the Huffington Post, Dimon’s action raises a number of troubling issues, including: 1) why is Mr. Dimon on the Board of Governors of the Federal Reserve Bank of New York, when his firm is benefitting greatly from this entity?  Isn’t that a major conflict of interest?; 2) Doesn’t Mr. Dimon owe his shareholders an apology for going along with risky practices when he has a duty under Sarbanes Oxley to ensure that the bank’s risk mitigation strategies are sound?; and  3) since Chase has been implicated in foreclosure fraud, shouldn’t they be making a commitment to helping America’s many homeowners who are underwater? In addition, JP Morgan Chase’s recent losses raise the significant question of why is Chase (as well as other megabanks) gambling with FDIC-insured dollars?  As William Greider points out in The Nation, banking reform should have ended the practice of banks gambling with FDIC-insured funds.  But, banks and their regulators have […]

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The Shareholder Activism Season is Here!

Calling all shareowners! Spring is the time when the majority of shareholder meetings are held and investors need to vote on key issues facing corporate management. As an investor in direct company stock, you are a part owner of the company and have the responsibility to vote on a wide range of issues facing the company(ies) in which you invest. When your proxy ballot arrives in the mail – be sure to respond! Inside you may find the opportunity to vote on shareholder concerns you didn’t realize were being raised with the company. There may be votes on issues addressing the environment, worker safety, linking executive compensation to sustainability goals, home mortgage policies, recycling, and the corporation’s political contributions and lobbying – among other pressing issues. An excellent resource for learning about the key shareholder resolutions this season is the 2012 ProxyPreview produced by As You Sow. This is a great compendium of the resolutions put forward, including background information, identification of the resolution filers, and explanations of the importance of the resolutions. It’s a must-read for both new investors and experienced proxy voters.  If you own direct company stock. be sure to check-out the ProxyPreview and Green America’s new Shareholder Resolution Focus Lists in order to be an informed voter! Our Lists highlight a select number of important resolutions in need of support in order to improve corporate policies and practices. The resolutions on our Lists begin facing votes […]

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