Tom's Corner: Giving community banks their due
(NEWSCHANNEL 3) – In a recent commentary, Tom Van Howe implored us all to move our money from the big banks to local credit unions, but local community banks felt left out, and Tom is correcting that.
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Sometimes being nearly right isn't right enough.
That's what happened to me in this time slot two weeks ago when I said it was time to move our money out of the so called too-big-to-fail banks as part of a growing grass-roots effort to break them up, to make them smaller, to never again let them bring us to the edge of collapse.
The big banks, after all, are the remorseless ones who use our money in high-risk investment schemes that line their pockets with bonuses if and when they pay off, and ask taxpayers to be bailed out if and when they fail.
They are the ones who have forked over millions of dollars to lobbyists to fight banking reform, and thumb their noses at national consternation with their greedy banking practices.
On the point of moving money out of the big banks, it is hard to find anyone who disagrees, but where to move it is a different matter.
Recently, I said it's hard to know for sure which banks are truly local, and pointed people in the direction of credit unions where they actually pay three to five percent on the balance of your checking account, while banks pay less than a half-percent on savings accounts.
Jim McPhee, CEO of the Kalamazoo County State Bank in Schoolcraft, and the Chairman of the Independent Community Bankers of America said I was unfair to the nearly 8,000 community banks across the country, and he is right, I did not give them their due.
These, after all, are banks with no connections to the Bank of America, to Citigroup, to Wells Fargo and so on, and they don't want any. None of the local banks were a player in the sub-prime fiasco.
As for why banks pay so very little on savings accounts these days, McPhee says local banks and credit unions aren't competing on a level field. Simply put, credit unions, as created in 1934, don't pay taxes, but banks do, an average of 34 percent.
In these critical times of health-care, social security, wars, and growing environmental issues, McPhee argues to for credit unions to be tax exempt makes them a part of the problem instead of the solution, and it's hard to argue with that.
However, until there is a change in the law, that's the way it is.
To find the community bank nearest you, check out ICBA.org.
In the meantime, my recent message hasn't changed at all, help diminish the power and arrogance of the big banks, move your money.
