The "Occupy" protesters on Wall Street and in other parts of the country have focused much of their anger on our nation's financial system, with what they call federal "bailouts" and "billions in bank profits." Protesters are especially angry at the biggest banks, and according to media reports, they are not alone.
While these protesters have been criticized for failing to propose many real solutions, one thing they have proposed is that consumers "vote with their feet" by moving money out of the larger financial institutions.
However, what's often lost in all this is that not all banks are the same and not all bankers are the same. And not all banks or bankers deserve blame for today's economic conditions.
The fact is there's a long list of those who bear some responsibility for the 2008 financial crisis, our nation's subsequent recession and the terrible economic and human consequences that have ensued. It includes some elected officials, some regulators, some investment banks, some mortgage brokers, some sellers of mortgage backed securities, some home builders and housing speculators, Fannie Mae and Freddie Mac, as well as many people who took out mortgage loans that they couldn't possibly pay back.
Since there are more than 14,000 banks, thrifts and credit unions in the United States, consumers and businesses that opt to make a change have plenty of choices, but they should exercise caution and do their homework before moving their money. They should think about what they need from a bank, spend a few minutes on the Internet, and ask some basic questions:
- Is the bank safe and sound, with strong levels of capital? Is it profitable?
- Does it operate under the oversight of a strong regulator?
- Does it insure deposits through the FDIC?
- Is the bank convenient? Does it have offices near work and/or home?
- Does it offer good service?
- Is it actively lending?
- Are its fees and practices fair and reasonable?
- Does it provide the right products, services and state of the art technology?
- Did it issue or securitize subprime mortgages? Is it being sued over these mortgage- backed securities?
Some banks simply cannot pass these tests. Fortunately, mid-sized banks across our country can. Mid-size banks across the nation are not only safe and secure, but also large enough to provide the products and services that consumers, entrepreneurs and small businesses want and need. They typically have between $10 billion to $30 billion in assets and are often the largest local banks in the communities they serve.
And the local roots of mid-size banks make a big difference. Mid-size banks are some of our nation's most successful banks that typically started small in one city and remained focused on that city and the surrounding region as they grew. They are close to their clients and the communities. They understand and support what local businesses need to grow and prosper.
National surveys tell us that people have very simple and strong expectations of banks: they should be lending money to support local businesses and stimulate local job growth. Mid-size banks are doing just that. During and after the financial crisis, America's 20 largest banks grew loans by an average of only 4 percent. Meanwhile, loan growth at mid-size banks averaged 14 percent. Loans at the MBCA's 25 member banks total more than $225 billion. And they typically offer more than just loans, with a full array of financial and investment products and business-building expertise.
You may be angry at your bank, but remember that not all banks are created equal, and certainly not all banks are to blame. So before you make your decision to move your deposits, consider the positive difference mid-size banks have made and are continuing to make to support local business and stimulate local job growth. Do your homework first, and as the sergeant said on the TV show Hill Street Blues, "Be careful out there."
Russell Goldsmith is the chairman of the Midsize Bank Coalition, an advocacy group composed of 24 mid-sized banks in 41 states and the District of Columbia.