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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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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$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.

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7 Ways to Cheat on Your Mega-Bank

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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 […]

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