Banking

One of the most significant, but least noticed, consequences of the rapid and dramatic consolidation of the banking industry over the last decade is how much it has hindered the U.S. economy’s ability to create jobs. Our financial system is top-heavy with big banks that are scaled to meet the needs of large multinational corporations. There’s no single solution to this problem, but one of the most promising strategies involves creating state-owned banks that can bolster the lending capacity of local banks, helping them grow and multiply. More

North Dakota is the only state that has established a publicly owned bank. And what a difference it has made: Thanks largely to the Bank of North Dakota, the state has four times as many local community banks per capita as the national average, and they have a much larger share of the market. Having a larger and healthier network of local banks has led to more small business lending and greater job growth.  We've published a set of graphs and an analysis that explain and illustrate the benefits of a state bank. More

What's really at issue in the fight over the CFPB is not how the agency is structured or how much power it will have, but whose interests it serves. More

A top Federal Reserve official said yesterday that locally owned banks do a better job of serving communities and small businesses, but they are threatened by federal policies that favor their big competitors.

In testimony before a U.S. House of Representatives subcommittee, Thomas Hoenig, president of the Federal Reserve Bank of Kansas City and the Fed's longest-serving policy-maker, said that community banks as a whole have held up better than megabanks over the course of the recession, but warned, "The more lasting threat to their survival concerns whether this model will continue to be placed at a competitive disadvantage to larger banks." More

With the now-expected passage of the financial reform bill, giant bankssee a golden opportunity to finally put the financial crisis, alongwith their culpability for wrecking our economy, in the rearviewmirror.

But the legislation leaves us at best only modestly less vulnerable to another meltdown.And it fails utterly to confront a deeper problem: even in the best oftimes, our banking system does not serve us very well. More

In the perilous aftermath of one of the worst financial disasters inU.S. history, one might expect credit unions -- which, after all, aremostly tiny by the standards of the banking industry and operated on acooperative, not-for-profit basis -- to be struggling. But data fromthe last 18 months show that the country's 7,600 credit unions are infact outperforming big banks and rapidly expanding their market share.

Since the start of 2009, credit unions have added more than 1.5 millionnew members. Their deposits grew by a whopping 10 percent in 2009 andare on track to grow even more this year.  More

One of the more menacing amendments circling the financial reform bill is a proposal by Senator Tom Carper (D-DE) that would bar states from enforcing consumer protection laws against national banks and would make it easier for banks to claim immunity from state laws they don't like.

This dangerous measure has some legs. The big bank lobby has described it as their "number one" priority. It has support from conservative Democrats and Republicans. The Washington Post editorialized in favor of it today. Although the White House opposes Carper's amendment, Senator Dodd seems lukewarm at best on the question of state authority and has refused to rule out including a version of Carper in his "manager's amendment," a package of negotiated changes to the bill that Senators who want financial reform to pass have little choice but to accept.

Here's why Carper's amendment would be a disaster... More

Across the country, independent business groups that have been urging people to "buy local" are now making "bank local" an increasingly prominent part of their message, bringing new grassroots visibility and organizational infrastructure to the Move Your Money movement.

"The message that big banks don't have our interest at heart and small, local banks do is really resonating," said Joe Grafton, executive director of Somerville Local First, a two-year-old coalition of independent businesses in Somerville, Massachusetts.  More