West Marin explores smaller, local banking options

01/12/2012

As the public learns more about federal funds that were given, sometimes secretly, to banks at no interest to avert an economic meltdown of their own making, anger grows among the 99%. Some of the largest banks added fuel to the fire as they responded to recent bank reform legislation, which limited the amount they could charge for ATM transactions. Bank of America announced it would instead levy a monthly fee for the card itself, and a number of the other large banks, including Wells Fargo, decided to test the viability of charging for ATM cards.

In response to these shenanigans, protestors encouraged depositors to move accounts from big banks to smaller, local financial institutions, and designated November 5 as “Bank Transfer Day.” But even before that day, a large number of people closed their existing accounts and opened new ones in smaller banks.

West Marin has joined other communities around the country in protest. Occupy Point Reyes, which meets on Sundays at 11 a.m. in front Wells Fargo, gathered signatures from 200 people who stated they either had already switched to smaller, more local banks or intended to do so.

But not so fast. In many cases, transferring to a new bank is complicated: first there is the question of what services smaller banks offer, and what functions customers are ready to forego. An equally important concern is how the financial institutions invest their money.

In Point Reyes, an ad hoc group composed of Eleanor Despina, Bing Gong, Rishi Schweig and Steve Costa, among others, arranged for four local financial institutions, Circle Bank, Redwood Credit Union, New Resource Bank and Bank of Marin to present their wares and explain how they can serve West Marin.

The interviews, each of which attracted about two dozen members of the public, took place at the Dance Palace. The final meeting took place last Friday, and since then, the organizing group has created a spreadsheet listing the significant features of each bank and circulated it by email on Monday.

None of the four financial institutions is willing to open a full-scale branch in this area. Circle Bank, which brought half a dozen employees to its presentation, including the bank’s president, is the only one considering installing an ATM machine here. If they do, and if all works out well, they would consider opening a “boutique” branch that would be open on a part-time basis.

But even setting up an ATM machine is a challenge. According to Circle Bank, the initial cost could reach $75,000 and multiple trips per week by an armored truck would be necessary to keep it operational. Circle Bank’s Board of Directors is considering the proposal. They have decided they will not authorize the immediate installation of an ATM, but they will continue to evaluate the idea.

Surprisingly, Redwood Credit Union announced that their highest priority is not attracting new depositors—although they still welcome them—but investing the large amount of capital it has accumulated since the bank transfer protests started. Redwood now has assets of more than $1.7 billion—more than any of the other three banks. Redwood branches historically signed up 100 to 200 new members each month; in one recent month, five times that number opened accounts.

Because Redwood is a nonprofit credit union whose depositor-members directly share in the institution’s gains, a number of local residents have decided to open accounts, even though the nearest of the 18 branch offices are in San Rafael, Novato and Petaluma. Redwood is in the process of establishing an ATM machine on the west side of Petaluma.

New Resource Bank, whose single office is located in San Francisco, is at the other end of the spectrum, with only ten percent of the assets of Redwood. It is also the least geographically accessible for West Marin residents, although several local businesses—Straus Dairy, Cowgirl Creamery and Hog Island Oyster Company—are among their customers.

One local resident, Marc Matheson, offered a rousing testimonial for New Resource during the Dance Palace presentation. The bank’s chief selling point is a commitment to promoting sustainability through its loan program.

Bank of Marin, which presented last Friday, is located nearest to West Marin. (President Russ Colombo confided that he bikes out to West Marin on weekends, although he was quick to say that he stays on the right side of the road in order to allow traffic to pass.) It is similar to Redwood many ways, but is also more traditional than any of the banks, its principal interest being lending to businesses. The lowest preferred lending amount is $100,000.

As Colombo—and other bank presenters—pointed out, it costs a bank the same amount to service a loan for $1 million and $50,000. (A line of credit, which can be used for smaller loans and is offered by all the banks, is not the same as a full-scale small business loan, particularly for new start-ups.)

So, what has our community learned from this investigation? Before the bank transfer movement took shape, some activists—including retired banker Richard Lemon—considered founding a local bank. But legal restrictions, along with the amount of capital needed, makes this option unfeasible. Several existing banks have now made clear that establishing a local branch is equally improbable.

Some members of the ad hoc group have started to explore the idea of an investment club whose members would commit funds that could be used to provide microloans to small businesses, including startups. Ideally, this could encourage people to stay in the community.

For more information about bank transfer activities and to obtain a copy of the spreadsheet, contact Eleanor Despina or Bing Gong at binggong@sonic.net.

 

The information for this report came in part from an interview with Eleanor Despina jointly conducted by the Point Reyes Light and KWMR News. Readers can hear the interview by going to the KWMR website.