by Jason Judd
INVESTING OUR MONEY IN OUR LOCAL ECONOMY
Bank of America has a relationship with one of every two households in America. In fact, Bank of America is one of only five banks that control more than 70 percent of the consumer credit card market. That’s an awful lot of power in a handful of institutions, and—in spite of their leading role in the financial crisis—their power and reach in our economy is growing. You can see it happening right here. The Washington, DC, area vies with New York and Boston on the east coast for the greatest concentration of deposits in the fewest number of big banks.
That means Maryland money is going to work for the biggest banks it’s pumped into for, among other things, massive credit card operations, trading desks and huge bonuses to executives. Bank of America paid its global banking chief, Tom Montag, $29.9 million in 2009. That’s about 854,000 overdraft fees at $35 a pop. John Stumpf, CEO of Wells Fargo, hauled in $21.3 million.
Our money is also paying for the army of lobbyists charged with stopping any manner of financial reform designed to right our financial system and hold the big banks accountable for the damage they have done to the American economy. The big banks laid out a record $29.8 million in 2009 to sway regulators and lawmakers in Washington.
We’ve got better uses for our money. Maryland’s community banks are the engines of local lending that help small businesses grow, and they’ve largely avoided the risky bets that ruined some of our biggest banks.
A study from the Center for State Innovation argues for moving Maryland’s public money to the community banks that are committed to building Maryland’s economy. Every $10 million in deposits the state shifts from giant out-of-state banks to Maryland’s community banks helps create up to 11 new jobs here.
Using public money to leverage private investment is smart economic policy. Bills to make it happen have been introduced this year in New Mexico, Massachusetts, Minnesota and Rhode Island.
And right here in Maryland, Delegate Bill Frick (D-Montgomery) has challenged the state to rethink its relationships with the big banks. John Lane, CEO of Bethesda’s Congressional Bank, backed the bill and said, “State funds would provide a stable source of liquidity that would be deployed locally via loans to local businesses and citizens. It sounds a lot like a common sense approach.”
Families, business owners, congregations, unions, chambers of commerce and local governments also can move their money. Remember that not all community banks are in the same financial shape, but all deposits up to $250,000 are insured by the FDIC.
As Frick told reporters in Annapolis in March, “Let’s put our money where our values are.”
The Tally:
Bank of America Corp.
Thomas Montag
2009 Total Compensation: $29,930,431
JPMorgan Chase & Co.
James Dimon
2009 Total Compensation: $9,274,494
Citigroup Inc.
John Havens
2009 Total Compensation: $11,276,454
Morgan Stanley
Walid Chammah
2009 Total Compensation: $10,021,969
The Goldman Sachs Group Inc.
Lloyd Blankfein
2009 Total Compensation: $9,862,657
Wells Fargo
John Stumpf
2009 Total Compensation: $21,340,547
Jason Judd directs the national Move our Money campaign at the Service Employees International Union in Washington, and is President of Frederick-based Cashbox Partners.
E-mail him at jasoncjudd@gmail.com.
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