Bankers: You can’t live with them-you can’t live without them — part II

Lending money, or what we today call banking, has been with us
since the earliest days of every civilization including
Mesopotamia, Egypt, China and India. The Romans added the concept
of accepting deposits and probably were the first to give a toaster
to each new customer. Lending money for profit has fueled every
human and societal expansion. For better or worst, our world would
not be what it is today if there hadn’t been someone willing to
take a risk and make a loan. 

Banking scruples have always been the societal challenge, as to
whether it is morally, ethically or legally correct. Some societies
find it immoral but still find devious ways to continue practicing
the craft. The key issue is if interest or the return on investment
becomes “usury” or excessively high. During Europe’s Dark Ages,
banking of all forms was banned, which is one reason there was
little economic or intellectual growth in Europe for almost 700

Banking has made America the great country it is today, but banking
has also at times failed to protect the public. We now have the
Federal Deposit Insurance Corp. to cover depositors but the FDIC
doesn’t protect the borrowing customers. We now know the 1977
Community Reinvestment Act was so diluted that it ultimately
encouraged predatory lending practices by some financial
institutions. The bankers have become the villains in this economic
downturn, not because of usury but because many banks deserted
their charter of providing community stewardship.

Usury may be less an issue in today’s world of instant financial
market adjustments. In the 1980s, interest rates hit 20 percent but
there were funds available. Today, loan rates are incredibly low
but getting a loan can be next to impossible. Banks are showing
record profits while making few loans, at least to small businesses
and individuals. The extent of this recession will directly depend
on how long banks continue tight money policies. Otherwise, this
could be the start of America’s Dark Age.   

Americans are beginning to see a new form of lending institution.
Known as green banking, it has two very different, but equally
important, aspects. First is electronic banking which most of us
are already acquainted as online banking. Besides paperless banking
transactions and direct deposits, fewer “brick and mortar”
buildings are resulting in less driving, less mail and greater
efficiency. The latest step in banking is “remote deposit” allowing
a customer to scan or photograph a check, send via computer or
smart phone to the bank, thus eliminating intermediate paperwork.
Banking is becoming virtual or as they say,” in the clouds.”

The second, and far more important asset of green banking is a
sustainability commitment. A green bank would make socially
responsible loans while limiting its carbon footprint and physical
impact on the environment. Products and services would promote
sound eco-friendly financing and customers would be rewarded for
banking green. The core mission statement must be more than “green
washing” or hype without substance. Sustainable loans produce
sustainable clients.

Such banking does exist. A pioneer is New Resource Bank, an
FDIC-insured San Francisco bank. Check for the
future of banking. The bank teams up with companies for solar
energy production, customers can buy Solar CDs to provide funding
for residential solar projects, ATM debit revenue is donated to
nonprofit organizations and insured certificates for renewable
energy are issued. And of course, the bank reuses, recycles and
composts up to 95 percent of its waste.

And above all, a green bank would be transparent. This recession is
only partially due to a tsunami of bad loans; the fact that no one
was watching the store at the federal, state or local levels was
the real felony.  All banks have stockholders that should be
watching the performance of the bank, both in loan product and
environmental relevance. While a lot of us like to talk to a real
teller or bank manager, is this always necessary? It may be more
important to read the quarterly reports, review their CRA
commitments and asks the right questions of the board. It’s your
money: make it sustainable.

Chris D. Craiker AIA/ NCARB Craiker is a founding member of
the Napa Valley Architects Exchange and the Marin Community Bank
and can’t balance his own checkbook.

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