By Theo Skeadas, Cambridge Local First Executive Director and AMIBA Board Member
For decades, we have entrusted too much of our money to a handful of big banks that hold power over our communities without giving back, regularly practicing unethical and biased lending practices and catering disproportionately to big, not small, businesses.
These big banks decide who among us can borrow money, but instead of reinvesting in our communities, they take our money and invest it far away. This is money that is needed to grow our communities and small businesses, essential for creating diverse wealth, family wealth, and generational wealth. Without access to cash, entire communities can become trapped in poverty.
The 1990s saw repeals of the McFadden Act (which constrained banks in their home states) and the Glass-Steagall Act (which separated commercial banking from investment banking). Large retail banks responded predictably: They opened branches across state lines, merged with investment banks, and traded on stock exchanges, shifting their already bare small-business lending funds to trading. That devastated the small-business lending industry, while reckless trading helped cause the 2008 financial crisis. Yet these banks have only grown larger.
The big banks also continue to practice unethical and biased lending practices such as redlining, which restricts lending in certain areas based on race. This practice is immoral and criminal. We can’t continue supporting these institutions with our savings, checking, or government accounts. Yet we do. And they keep gaining power because of it.
Is there a better way to deposit our money? YES. Next month, join our Move Your Money campaign and help inspire more of us to bank and invest locally.