Commentary –

Banking In Shark-Filled Waters

By William A. Collins

It’s like I have,

To walk the plank;

Every time,

I go to bank.

Banking used to be so dull. Profitable, but dull. Now it’s a riot of marketing and change. Walking into our local People’s branch virtually requires a hard hat these days. They’re tearing up the pea patch. Soon it will no longer be a bank, but a financial services center.

That, allegedly, will satisfy many customers’ cravings. They’ll no longer need a separate stockbroker. They can gamble right there among the tellers. This cherished little benefit was made possible by Congress. The old law, dating back to the Depression, kept banks out of the stock market. Too many had failed when their brokerage departments collapsed. Now we’re ready to risk it all again. But poor People’s! They’re finishing construction just as investors are pulling in their horns.

Other banking changes are also afoot. Fleet has just bought Summit, causing trembling in our community. Summit had been a pretty good place to escape the mega-banks. Now Fleet has already sent around a flyer containing its “Privacy Policy.” In essence it says that it will gather information about us from anyone it pleases, and share information about us with anyone in its “family.” That family is now so big that it could keep our phones busy day and night with telemarketers. The Federal Reserve Board had previously been planning to tighten up on its privacy regulations governing banks, but has since decided to put it off.

Fleet takes heat on other behavior, too. Community groups have charged it with shortchanging minority neighborhoods, and jacking up fees for customers of the banks it takes over. It’s no picnic being a superpower.

Citigroup, the biggest superpower of all, takes its share of heat too. Nosy citizen groups have found that it actively funds the coal industry, destructive African pipelines, clear cutting forests, genetic engineering, and the Three Gorges Dam. Well, presumably someone has to fund those environmentally risky things. But now federal banking officials are also accusing Citigroup of deceiving low-income borrowers about its high-interest loans. And to think, banks used to be so dull.

Of course, that was before the invention of the credit card. Now the battle among card-issuing banks looks more like X-treme Football. They sent out hundreds of millions of offers to sign us up, even to some of us who are unlikely to be able to repay. Then, when a lot of us got in over our heads and declared bankruptcy, the banks asked Congress to toughen up the bankruptcy rules. Connecticut’s federal lawmakers, long in the pocket of the finance industry, mostly went along. Only Chris Dodd and Rosa DeLauro stood up for consumers.

And at the very top of the credit card heap, there’s hanky-panky too. The Justice Department is suing Visa and MasterCard for conspiring to keep member banks from also offering American Express or Discover cards to their customers. Nothing like a little restraint of trade to spice up a dull old business.

Luckily, in most states there is an antidote to the hard edge and profiteering of these mega-banks. Even here in Connecticut it is still possible to start a new one. The Community Bank, for one, is opening soon in Bridgeport, Bloomfield, and Hartford, using some Fleet cast-off branches. Other local banks have escaped the merger frenzy too, and several towns even have credit unions.

It’s these little banks that are our best defense against redlining, privacy invasion, predatory lending, money laundering, and telemarketing. Sometimes it’s just necessary to look beyond those big ads and seek out your friendly local bank.

(Columnist William A. Collins is a former state representative and a former mayor of Norwalk.)