Wednesday, December 30, 2015

Credit and the Public Good, Part II

This piece originally was published in City Pulse on December 30, 2015.

In my last column, I discussed credit unions hoping to find one locally that might more transparently demonstrate sustainability values. I did hear back from one of my own credit unions, but not with any information that would make my judgment of their triple-bottom-line — social, environmental an financial — performance any easier. Fortunately I know enough from my readings in emerging business practices, including finance, that there are conscientious actors out there addressing triple-bottom-line outcomes in the financial sector. I have also identified one local credit union, among the many, that is also a Community Development Financial Institution, i.e. dedicated to funding disadvantaged communities. They scored high on the website I mentioned in the earlier column. 
UNEP Finance Initiative - Changing finance, financing change

Globally, the UN Environment Programme Finance Initiative developed the “Principles for Responsible Investment” in 2005 (see for more details). The six core principles are:
1: We will incorporate ESG [Environmental, Social and Governance] issues into investment analysis and decision-making processes.
2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
4: We will promote acceptance and implementation of the Principles within the investment industry.
5: We will work together to enhance our effectiveness in implementing the Principles.
6: We will each report on our activities and progress towards implementing the Principles.
The principles, aimed at institutional investors (i.e., foundations, pension funds, investment banks, university endowments, etc.), now have more than 1,400 signatories committed to those principles. Assets under management by these signatories now exceed $59 trillion. When the old guard tells you sustainable investing is a loser, tell that to these players.
But what about best practices for banking generally? Using my connections nationally with triple-bottom-line leaders, I was directed to Vancity. A credit union in Vancouver, B.C., with more than 500,000 members, Vancity isn’t shy in sharing its vision for what community banking should be. You can read it on their website. (excerpts here)
Image result for vancity
"At Vancity, our vision is to redefine wealth in a way that furthers the financial, social and environmental well-being of our members and their communities.
"As of December 31, 2007, Vancity is officially a carbon-neutral organization. … Our data was audited by Interpraxis (our social auditor).
"Currently, the minimum wage in BC is $10.25/hour, but the living wage in metro Vancouver is $20.68/hour[$15.14US]. This means that families who work for low wages often have to face impossible choices: buy food or heat the house, feed the children or pay the rent. Paying a living wage allows individuals and families to meet their basic needs and contribute to their communities. A Living wage means strong local economies, sustainable cities and healthy communities."
I could write many columns on Vancity based on a review of their very transparent and informative website and conversations with their leaders. But Vancity isn’t alone. When I asked them for examples of other shining examples of triple-bottom-line credit unions, they immediately pointed to the Global Alliance for Banking on Values.
Image result for global alliance for banking on values

This is an emergent international group of banks committed to higher standards of sustainability and community wealth building, which we might hope local banks and credit unions would support. But there are currently only eight U.S. financial institutions which have joined this group representing banks and credit unions from Africa, Asia, Europe, Latina America and Australia. What is it they share, and could we coax our local credit unions and banks to adopt the principles and practices they support? The GABV Principles of Sustainable Banking are intended to describe fundamental pillars of values-based banking:
1. Triple bottom line approach at the heart of the business model 
2. Grounded in communities, serving the real economy and enabling new business models to meet the needs of both 
3. Long-term relationships with clients and a direct understanding of their economic activities and the risks involved 
4. Long-term, self-sustaining and resilient to outside disruptions
5. Transparent and inclusive governance
 6. All of these principles embedded in the culture of the bank.
Can our local banking leaders re-evaluate what good banking looks like based on the successful example of credit unions line Vancity? If we members of credit unions never ask or involve themselves in the direction of their credit union, the narrow economic growth paradigm will continue to erode away the cooperative and community wealth notion behind them. Credit unions should be natural homes for the type of sustainable enterprise that Vancity emulates.
In fact, it was why they were created in the U.S. in the mid-1920s. Maybe we need to elect a slate of directors at our credit unions that sees the virtues of a TBL focus? I am sure willing to help that cause. Do credit union members even know how to run for a position on your board? From the few local credit union websites I have examined, it is not at all transparent, a key principle of both the Principles for Responsible Investment and the Principles of Responsible Banking. We have a long way to go.

Thursday, December 17, 2015

Credit and the Public Good, Part 1

(An earlier version of this was published in City Pulse, a local alternative weekly serving Michigan's Capitol region.)

I suspect that few folks reading this don’t have an account at a bank or credit union. I belong to two credit unions. Credit unions differ from traditional private banks in that they are member owned. This makes it all the more interesting that when I wrote the credit unions I am a member of to ask how we pay our employees, I received no initial response. I asked for three simple figures:
       • What is the minimum beginning wage for a full-time employee?
       • What is the median salary of all employees (the amount that 50 percent of employees make more or     less than)?
       • What is the wage ratio from the bottom to the top?

I looked at their websites before I sent this request, but there is almost no information about how either credit union compensates it employees. I thought OK, I can see where they may not want to share with the larger public, but I was taken back that they wouldn’t share this information with its members/owners.

Now the genesis for this query comes from the physical expansion of both credit unions, which are both statewide entities. Members seem to have no say in the decision-making that goes into this, even though we are member owners? There is little if any transparency in the decision process. The boards has no minutes shared or posted of their deliberations. And in only one case is there even any slim excuse for a financial statement that might allow a member to judge if the expenditures for expansion are warranted.

In the midst of this query into local banking, I tripped upon a new web site . This site allows you to type in your city and see a rating of local financial institutions and how they rank. They use seven criteria pulled from publicly available data: 
1) Small Business Lending, 
2) HQ Location, 
3) Bank Branch Concentration,
4) Ownership Type,
 5) Bank Size,
 6) Small Farm and Agricultural Lending, and
 7) Speculative Trading. 

They then aggregate scores and rank banks/credit unions according to their impact on the locale. The scoring system is spelled out, so one can decide if the scoring reflects one’s own values.

Lansing has a number of institutions that score STRONG, the highest rating. Neither of my credit unions made that category, each coming is as MODERATE. This was somewhat surprising because credit unions and mutual savings banks get an extra point over shareholder-owned banks. Of course, as I mentioned, one can take issue with the criteria selected in this rating system. But the more important issue for this credit union member is, does the place where I bank align with my values. It wasn’t that long ago when we were looking to refinance our home after interest rates fell that we went shopping for a new mortgage. Universally the loan officers we approached and asked how their funds were invested were surprised that we would ask such a question. I mean, after all, isn’t this activity only about money and the best deal for me? Why should we be concerned about whether the bank invests most of its money out of state as long as my interest rate stays low?

Three of the rating criteria used by Bank Local are around what they do with the money we lend them — do they lend to small business; do they lend to small farms; and do they engage in speculative trading. The website allows you to see how each bank/credit union scores in each criteria. It’s not the most complete transparency that I would like when choosing a financial institution to do business with, but it’s certainly adds some perspective to consider. I still want to know how they share the wealth within the business, thus my three-part question. I’m ready to move my accounts to a financial institution willing to tell me what my money is doing for others. Is there any bank or credit union in this community that is willing to do so? I decided to try one of the STRONG rated credit unions in the area, asking my three questions, indicating that I was shopping for a new home to house my finances. I was promptly and politely informed by the VP of human resources for that credit union, that while they were very proud of their treatment of employees they would not disclose this information to me.

Thinking that this might be a reasonable response to a non-member, I replied asking if I would be able to get this information if I became a member. I’m still waiting for responses. My search for a credit union to bank with continues. You can follow my learning journey here.

Sunday, December 6, 2015

Arming Ourselves to Death

Such a fixation our culture has on guns and violence as a response to fear. From Dwight Eisenhower's famous farewell speech warning against the Military Industrial Complex to the NRA's no holds barred to make sure everyone has a gun on them at all times, our culture is sick, probably cancerous, and possibly stage 4.

A report last week from a Credit Suisse conference in West Palm Beach, noted

       "major defense contractors Raytheon, Oshkosh, and Lockheed Martin assured investors that they stand to gain from the escalating conflicts in the Middle East. Lockheed Martin Executive Vice President Bruce Tanner told the conference his company will see “indirect benefits” from the war in Syria, citing the Turkish military’s recent decision to shoot down a Russian warplane.
        The incident, Tanner said, heightens the risk for U.S. military operations in the region, providing “an intangible lift because of the dynamics of that environment and our products in theater.” He also stressed that the Russian intervention would highlight the need for Lockheed Martin-made F-22s and the new F-35 jets. [The Intercept, Dec.4, 2015). - Center for Responsive Politics
Who says war doesn't pay.Why else would the Center for Responsive Politics be able to show that in 2015 alone, as of data reported by October 23, the defense industry had spent more than $95 million lobbying our government to insure their profitability.

Researchers William Hartung and Stephen Miles reported last summer what that looks like by looking at campaign contributions to House Armed Services Committee Chair, Mac Thornberyy (R-TX). I'll spare you the details here, save he has collected a mere $250,000 so far this election cycle. Put simply more evidence that Eisenhower was right.

With that kind of money floating around, and it's only the money that isn't hidden or dark, we can see an increasing part of the corruption that is our electoral and political system.

The US discretionary budget is now mostly military spending. When you add veteran's benefits it exceeds 60% of discretionary spending!!!!

Former Secretary of Defense Robert Gates used to joke that he had more band members than the State Department had foreign service officers. We have 800 or more military bases on foreign soil and constantly flirting for more. The more bases, the more we need arms to equip those we station there -- an arms merchant's fantasy.

But it is not simply our military that's loaded for bear, it's increasingly our domestic culture. Even since the tragedy of San Bernadino last week, guns are flying off the shelves; the same shelves that supplied the deranged killers with their tools for tragedy. Here in Michigan, our medieval legislators are trying to lift any restrictions on concealed weapons being in our schools, libraries, or other public places. Do we really live in a Gunsmoke world where we need to deputize and arm everyone to shoot when someone looks threatening?

By this picture our priorities, both national and individual, are responsible for accelerating the violence our fear mongering culture readily glorifies in television and motion picture crime and terror, that seems to get bloodier and bloodier with each passing season. There seems to be few willing to stand up and oppose this runaway madness. Congressional candidates are largely afraid they will be labeled soft, or will unleash large funds against their re-election campaigns, if they stand up to the military, gun toting mindset that so holds our nation's conscience hostage. 

Enough! It is time to challenge the constant feeding of endless war in our name through the upcoming budget process. Our elected officials need to hear from us that it is time to shrink the military budget and the number of bases and weapons that arm the world. Especially because the Defense Department has never been audited!!!  Legislation that would require an audit of the Pentagon has been languishing in a Republican controlled legislature for years. Why wouldn't self-described fiscal CONSERVATIVES want to insure that the funds we collect are spent well?? Who could possibly be against this?????? Perhaps we need only look back up to origin of the $95 million figure at the beginning of this blog.

H.R. 942 "Audit the Pentagon Act" should be on everyone's agenda. Check it out yourself and then contact your representative and senators to co-sponsor and support it's passage.

The countervailing pro-active response would be two actions:

1) Fulfilling our commitments to the UN Peacekeeping missions in which we are currently in arrears ($337 million in 2014)

2) Support the Department of Peacebuilding Act, H.R. 1111 which would establish an agency which's first job is peace through non-military efforts while building a culture of peace globally and domestically.

And speaking of domestically, the clear first choice in my mind is to outlaw the reproduction, sale and use of assault weapons. They were designed to kill people. they are by design a WEAPON OF MASS DESTRUCTION.  They have no use beyond that, unless making people afraid is a legitimate use. While I have no problem with people owning rifles or handguns on their property, their carry into public places is an anathema to me. 

These are much more sustainable choices than feeding the growing trends that promise to arm us all to death.Don't let the fear mongers win.