Back with an update on our attempt to move our money to a bank that will use it to help support the community we live in. It's not a lot of money, but we'd rather know our deposit account isn't being used by the big banks to support things we don't agree with (think sub-prime mortgages, CEO mega-salaries, or investments in the types of corporations that generally take advantage of people in the name of profits).
First, I'm not good at this type of thing. I’ve never been great at math, figuring out my taxes, or making shrewd financial decisions. Luckily, with so many smart people working on good things out there and access to boundless information over the internet, there’s ready help to make the money move easy and informed if you know where to find it.
Step One: Bank Sourcing
Our first step was finding out the local banks close to where we live. The reason I’ve stayed with J.P. Morgan so long is probably convenience, so it will be important to make sure the new bank we choose remains convenient.
I’ll be honest: change of personal behavior is incredibly difficult, so the easier we make it the better. Maybe there’s a very thin threshold separating moral action or inaction, at least for beginners. We’re farmers after all, and like everyone else facing a time deficit, it doesn’t lend itself to driving forty minutes round trip to make a deposit.
The “Move Your Money Project” has a simple website that can help you put together a list of small, independent local banks in your area in twenty minutes.
After using all three tools they offer to find a local bank by entering our zip code, we had a list of five potential banks within 10 miles of us (a limit we set ourselves based on what we consider local while maintaining convenience): Hudson Valley Bank, Hudson City Savings Bank, Putnam County Savings Bank, Emigrant Savings Bank and Trustco Bank.
Step Two: Interviewing the Banks
There is something empowering about going through the process of choosing a new local bank based just as much on principles as self-interest. Once the bank representative has finished pitching you on why they are the best home for your money based on your self-interest (convenience, protection against fraud, account fees), the tables are turned and you are in new, strange territory.
We walked into the nearest Hudson Valley Bank branch, located in the slightly run-down Beach Shopping Center strip mall that is obviously experiencing a slow death since the newer, larger strip mall was put in two miles down the road. The bank branch itself was a bit worn and the only people waiting in the teller line were three Hispanic men dressed in worker clothes (this was a good sign to us, as Peekskill has become a majority Hispanic town in the last ten years, so the bank is serving the local population).
We were pointed in the direction of an empty desk and told to wait for Kendra. Kendra, when she emerged from the bathroom, was an African-American woman who went immediately into a canned spiel after we told her we were interested in learning more about a business checking account. After learning about their account fee structure, we told her we wanted to move our money to a bank that was lending to the local community and wanted to ask her a few questions: what was their geographic market, what are their lending rates to local small businesses and community projects, what are their lending rates across different class and race lines?
Kendra stopped and took a second look at us, focusing on us for the first time. Then she asked us what our business was and we told her we were starting a farm. Then we began talking about farming and about her memories of her grandmother’s house in Jamaica, how her grandmother had goats and chickens and a pig and nothing ever went to waste. It seems almost everybody has a grandmother or grandfather who raised their own vegetables or animals.
Then Kendra told us that it was the right thing to find out who you’re bank is lending to and if they’re practicing “red-lining” (discriminatory lending practices based on race or class) and that while she didn’t have that information at hand, it was information that was public and every bank’s "CRA" office was legally mandated to provide it to you. When I asked her what CRA stood for, she told us these reports on banks were part of the Community Reinvestment Act.
That act has a nice ring to it.
Step Three: Grading Banks on the Bigger Things
The problem with access to so much information is that there is so much that it is often impossibly time-consuming to find what you are looking for. Modern information can be like a form of snow blindness, where corporations can hide how they are operating by being mega-transparent and drowning the investigator in mountains of paper-work and data.
We needed to find answers about how our local banks act or don’t act in the interests of their local communities before making our decision about where to move our money, answers that most bank associates didn’t seem to have at their fingertips.
The CRA requires all federal regulatory agencies to examine banking institutions for CRA compliance, rating all banks on their CRA performance. Banks are graded on their lending practices across the community they are meant to serve, including lending for community projects, small businesses, the amount of loans that stay in the local community (versus an investment in something 300 or 3000 miles away) and across lines of income and race.
Most CRA performance reports can be found either through the the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency or the Federal Reserve Board. These reports can help you get as good a big-picture as possible of where your deposit money will go once you open an account with any specific bank.
So we've decided to put together a banking report card before we decide to move our money. Instead of being grilled by banks on our credit worthiness, income level, and asset wealth, we thought we'd grade them on whether or not they're benefiting our community. The way they used to do and should be doing now.
Now we've got some homework to do, waiting for a rainy day. Hopefully, the third installment of this experiment will have our money in a place where it keeps working while we're not using it. We like to think of it as our way of improving the community soil.