March 29, 2022

30. What's the bank doing with your cash?


Here’s today’s listener letter:
I heard the recent episode about banking and I have more questions! I’m not 100% ready to cut the cord with my big bank, but I liked your advice about moving some of my savings to a bank that lines up with my values as a first step. My question is, how do I find the right bank for me?

Links from today's episode:
https://mightydeposits.com/
NYT article about Black homeowner suing Wells Fargo

Support the show (https://www.buymeacoffee.com/spenddonate)
Transcript

Here’s today’s listener letter:

I heard the recent episode about banking and I have more questions! I’m not 100% ready to cut the cord with my big bank, but I liked your advice about moving some of my savings to a bank that lines up with my values as a first step. My question is, how do I find the right bank for me?

So the listener is referring to episode 27 which was called “Where Should I Bank?” If you missed that one, please do check it out. Some interesting research findings in that episode including some highlights from the books Race for Profit and also The Color of Money. If there’s only one thing you take away from that episode, I hope it will be that moving some of your savings can be a great first step into banking more in line with your values. It can be more exciting to talk about our investments and are we investing in ESG funds and all of these socially responsible investments, but cash is really powerful. And you might have some that is just sitting in a bank account earning basically no interest, doing nothing, not even working towards your values. Let’s give that cash a job.

Today’s listener is wondering about how to find the right bank to do that with.

Well, in researching this, I found a great tool that you will want to explore. First, you can use it to uncover what your current bank is doing with your cash, then you can pick a bank that you might prefer instead.

So this is how it works. It is very simple. The tool is called Mighty Deposits and it is new, it is a bank comparison website started by two women not too long ago to increase transparency about what banks are doing with our cash.

So, the first thing you do is go to mightydeposits.com and look up your bank. You might be interested to know how much of our cash, the cash that is sitting in our checking and savings accounts, or CDs is being loaned out for community investments- like housing in your community, local businesses, local farms. So you go to the website, and look up any bank. For example, at the time of recording, BoA has 26% of cash going to community investments and is a top funder of fossil fuels. Wells Fargo has 37% of cash going to community investments, not a great overall number, but specifically above average when it comes to community investments in public works and housing… unless you're Black I guess. Not sure if you saw the recent headlines about the dramatically different mortgage approvals for Black applicants compared to white applicants. There is a heart breaking story that has been going around about the discrimination a Black teacher faced in California when he called his bank, Wells Fargo and tried to refinance his home. When he first called, he was told that he would be a shoe in, that his career history, his education, his credit score, it would be a quick approval. But he got the run around for weeks and then months, for almost an entire year. You can read about his class action lawsuit in the NYTimes on March 21, 2022. Nationally, Wells Fargo approves mortgages for 72% of white applicants and 47% of Black applicants. This is even worse than the numbers for the other big banks. So that's Wells Fargo, it should also be mentioned that they are also a top funder of fossil fuels. 

So of all the big banks we’ve discussed today, Chase Bank has the lowest percent going to community investments so far today, that's at 20%. They are a top funder of fossil fuels. On the other hand, you may have heard about a newer bank called Ally Bank. They are putting 65% of cash into community investments which is 2/3 higher than the national average. They are not a top funder of fossil fuels. From what I can see on the breakdown it looks like this money is invested in Utah. Which is also the home of the Mormon Church which means it is the home to a staggering amount of wealth, maybe we will do a future episode on religious houses of worship and money. Drop me a note if that sounds interesting, if you’ve ever had a question about religious giving. So that’s Ally Bank, the majority of cash goes into community investments, specifically in Utah. 

But maybe you are looking for a bank that has a high percentage of money that goes into your own community, or a community that you know is particularly under resourced. You can use this very same website mightydeposits.com to look for a bank that meets your criteria. 

For example, you can look at some of the highlighted banks or credit unions. I was researching a bank called Hope Credit Union in Mississippi that is doing some awesome work in terms of their community investments- they are investing in local housing, local businesses with a focus on Black American Equity, Communities of Color and Low-income Communities. You love to see it. Imagine your checking and savings accounts being used to invest into those communities.

There’s a final way you can use this tool. You can literally go to a drop down menu, this is so cool, you can go to the drop down menu and check off what you’re looking for. Maybe you want a bank that is Native American owned. Maybe you want a bank that is Native American owned AND Sustainable. Maybe you want a bank that is Native American owned AND Sustainable AND is also specifically focused on serving low income communities. You can find a whole list of banks that meet your criteria using this tool. You can filter for the bank being above average in terms of focusing on housing, or small businesses, there are so many choices.

I just experimented with the tool and said that I wanted a Black woman owned bank and a whole list of banks popped up along with a mini scorecard of how much cash they put towards community investments and what their focuses are. Today this podcast is being recorded on the Indigenous homeland of the Piscataway and the Nacotchtank…..also known as the Anacostan for whom our Anacostia River is named for… their homeland became a forced labor site for thousands of people who were kidnapped from Africa and then enslaved and built up all of the monuments and public squares that we stroll along today until slavery was banned and the enslavers were paid reparations from our taxpayer dollars. Yes you heard that correctly, enslavers were paid almost $10,000 per person that they released from enslavement. That’s a long winded way of saying this podcast is being recorded in Washington DC today. When we talk about caring about our local communities and using our money to feed back into our local communities, we have choices. I just looked up Black woman owned banks and there are multiple banks that are here in the DC area. One of them is called City First Bank of DC, another is called Industrial Bank, Harbor Bank of Maryland, there are choices.

There’s something exciting about the idea of our cash being invested into the communities we care about. 

So today we did a deep dive into Mighty Deposits, a tool to help us find out what our cash is being used for and to find a better bank, I will include a link for it in the show notes. If you have other questions about banking better, drop a line anytime.