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It’s Time to Move Your Money

Posted on September 23rd, 2008 by Will Marre.
Categories: ADP Diary, Community, Leadership.

It’s time to take our money away from big faceless banks and put it where it belongs.  In our own communities.  I’m not paranoid or anti business.  To the contrary, I’m pro honest business.  But I’m also realistic.  For many years I worked with clients involved in mergers and acquisitions.  I’ve spent time in rooms with investment bankers, financial analysts and accountants who were busy changing financial assumptions, inflating valuations and reassessing risk to make a deal “work.”  These are smart guys (and gals) just making it up.  I was present when some of our biggest financial institutions were training their sales forces to sell sub prime debt while they explained it would slice and dice parts of risk-drenched loans into a variety of investment portfolios until the risk of any single loan disappeared.

Someone said mixing high-risk debt with low risk debt is like putting a little arsenic in a Jamba juice.  Blend it up and pretty soon the poison disappears.  Guess what?  It doesn’t. 

Although that may not make common sense, it made great sense to a commission driven sales force ready to descend on people who had never borrowed money.  No, not all these people are evil or even extraordinarily greedy.  What they are is extraordinarily tempted.  And one of our society’s primary restraints against great temptation is legal regulation.

But with great sadness I see once again our deeply compromised government saying one thing while intending its exact opposite.  Like the Clean Air Act, which allowed for greater air pollution, this newly proposed regulatory reform of our financial institutions is simply a word trick.  Double speak.  Hogwash.  Here’s a few tidbits:

First regulations don’t work if the regulators are corrupt. Wall Street firms have averaged paying fines of $1 million a day or $400 million a year for the past 6 years for violating current regulations.  This, you see, is just a cost of doing business.  It’s cheaper to break the law, pay the fine, and make a fortune.

Now Henry Paulson and the old Wall St. boys want to merge high-risk investment banks like Merrill Lynch and Goldman Sachs into a huge consumer bank like Bank of America and Wells Fargo.  It’s the arsenic in the blender again.  This works because tens of millions of us put our deposits into commercial banks that give the risky, greed soaked investment banks a platform for more casino games.  The reason it’s so tempting is that big bank deposits are insured by you and me, the taxpayer, through the FDIC.  Our insured deposits give them a new capital base.

Sure, they claim the Federal Reserve will keep a tight lid on over-the-line risk, but what regulators do you trust today?  So…now all of us, the taxpayers, are going to guarantee the continuing risks of investment banks.  And what do we get?  Zilch.

Not only that, all these new arrangements will do is strengthen the unrestrained power of big banks at the expense of local banks and credit unions.  The result could be higher consumer costs, less competition, and more shenanigans.

Our real problem began decades ago when our economy switched from a manufacturing, real value producing economy to a financial one.  Real wealth is the result of serious invention and innovation, science and engineering meeting genuine human needs.

We lost our mojo of invention and high quality production into converting all our assets (like our homes) into debt instruments to be leveraged and traded.  Today financial services are two times bigger than our entire manufacturing sector.  In the late ‘90’s we removed nearly all regulation of banks, insurance companies and real estate debt.  That’s why we have 27% interest rates on our credit cards and million dollar home loans to unemployed people.  But when finance exceeds its legitimate role to just moving numbers on a spreadsheet and inventing global casino games simply to place bets with borrowed money hoping to make a financial killing, the decline of our economy is inevitable.

So, what’s the greatest thing you can do?  First, deposit money in a credit union.  A credit union is the bank you can own.  Credit unions are owned by their own depositors. 

Credit unions operate on a human scale by people like you and me.  They began 150 years ago to help farmers be free from big city banks who didn’t understand real life.  They have all the same services of a huge consumer bank and they loan money at low rates to their own depositors.  They have an international ATM network and have more sophisticated on-line banking that lots of big banks saddled with legacy IT systems.  All their accounts are FDIC insured.  There is simply no reason why every American should not be a member of a local credit union.

Second, if you’ve ever considered writing or emailing your congressperson, now is the time.  We don’t want investment banks and consumer banks united.  It’s time to stop this nonsense, create a real economy and re-enthrone ethics.  And yes to create financial institutions we can trust.  We need fair, effective and enforced regulation.  All of us are better off when we have to answer for our choices.  It’s common sense for the common good.

To visit American Dream Project’s homepage, click here.


Comment on September 24th, 2008.

For some reason I did not receive email notification this time of “new material” being posted to the blog.
Maybe this explains the lack of comments.

I think it absurd that we should write a blank check to bail out these so called banks. The rhetoric is “no golden parachutes” when we should be DEMANDING prison for these CRIMINALS that force usery on the unsuspecting and weak, and then expect our children to foot the bill.

Fine job to the Bush administration… YOU have slaughterd the Bill of Rights and run our country into the ground economically in just 8 short year.. and your not done yet!

Marcia Ribeiro
Comment on September 24th, 2008.


This was a good one, a really good one. Simple truth.
Thanks, you did again

Comment on September 24th, 2008.

Check out what Ron Paul has to say about the “bailout”

Brian C.
Comment on September 24th, 2008.

This gradual erosion process spanned four presidencies; culminating into the mess we have today – bad business practices/ethics.

With the end of good to moderately good business ethics that were once modeled with Virtue as a goal, as in, pride in quality product, pride in customer service/satisfaction, pride in maintaining the valued business family,(which contains content, qualified employees), and pride in helping out in the community, which rounds out the overall business model based on that virtuous business ideal.
Quality goods and service.
Happy/content customers – meeting needs and expectations, customer service.
Happy/content employees who are valued members of the business family.

There was a time when such virtue in business was a big part of the equation for success – this was more so seen in smaller start up, mom & pop business.

Today’s “big” business is based on:
– The barest minimum quality that we can get away with in product/goods and the most minimal service we can get away with and still be able to slide by and function.
– Customers are our cash cow, we will cattle them in and milk them for as much as we can get away with, to maximize our profits for our real customers – the stock holders, and to pay for top level salaries.
– Minimize our employee force to the barest minimum, finding the most cost effective source of labor with least amount of benefits provided that we are able get away with. They are an expendable commodity that we can outsource or replace occasionally in the guise of cutbacks to keep costs down to the minimalist amount that we can get away with to maximizing company profits.

One model supports quality, pride and innovation in improving product and service.
One model supports quality customer service/experience, meeting the customers needs.
One model supports and values employees as an asset to the business, not a commodity.
One model supports a healthy business environment and market.

The other model… leads us to where we are today.

Which company do you want to own or work for?

Comment on September 24th, 2008.

Here is an interesting hypothetical I worked out two nights ago with my wife. What would it look like if we just let the whole mess bankrupt itself. A huge financial collapse. Perhaps the dollar will further loose value, maybe significantly. China will stop sending their money over here becase we’re a black hole for the money.

Now, just if… the value drops soo badly, now importing goods from China is actually becoming increasingly expensive. The Chineese demand $8.00 for something that cost $1.50 last year. Now there might be enough financial incentive to start manufacturing again – exporting goods – GDP up. Hmmm.

Comment on September 24th, 2008.

If they really want to spend 1 trillion dollars in a bail out…give each TAX PAYING citizen a $5000 investment credit. They can each invest it anyway they want for ten years then cash it out as they wish. It is my money, let me invest as I believe.

Comment on September 24th, 2008.

Hi Will,
Good info. and good advice. However, one correction about credit unions and how they are insured…the NCUA operates and managers the National Credit Union Share Insurance Fund, or NCUSIF, which covers all federal credit unions and a majority of state-chartered credit unions — not the FDIC.

Like the FDIC, the NCUSIF insures individual accounts up to $100,000. Again, that’s per person, per institution; that is, if a person has accounts in separate credit unions, each would be covered up to $100,000. Also like the FDIC, the credit union insurance covers retirement accounts.

More information can be found at the association’s website at

Comment on September 24th, 2008.

I have spent a good part of the last two days emailing various people in Washington. I am tired and frustrated. As usual they did the photo opportunity thing and now they will go underground and start the games. These people in Washington have no shame or guilt because this bailout is exponentially bigger than their usual stealing. We have got to have a better system of control over our representatives in addition to our banking system. Between George Bush and Congress they have cleaned out the vault and now they are going for more. And neither one of our Presidential candidates has a clue and they don’t even think it is important enough to be in Washington now(they are Senators aren’t they?)to do what needs to be done to get this bailout right. By the way, I don’t even know what the process is to approve the bailout, is it a vote of Congress or just the banking committee or what? Just details but damn our future is at stake and I personally don’t want to send in the clowns on a matter this important. They should put together the proposal and call a national vote of all registered voters to make the final decision on a simple yes or no vote. We have to take back our country and our government and now seems like a good time to do both. Throw the bums in Washington out enmasse.

Comment on September 24th, 2008.

I’m so glad I get to agree with you again.

The whole justification for wealth, which you and I both agree is often justified, is that they are the risk takers. But what about when they fall? Now WE have to subsidize their risk, without the upside of reward???

And when we suggested we deserve a cut, the official said, “That would be a deal breaker.” In other words, it is fine for me to invest in your business, but not to reap the rewards. What sort of “deal” is that?

No wonder they want the bailout passed fast! Before we see what the hell they are doing!

There was always a justification for bailing out business, and that is that the economy needs it. But then we we wish to claim our reward we are told that no, it doesn’t “trickle down” because the wealthy were the ones who took the risks!

No, in circumstances such as this, they are simply the ones who control the resources. They are simply the kid with the ball. And if we want to bring our ball, they call it a “deal breaker”.

It is great to encourage wealth. But once that 1% that has it begins to lose it, the last thing we have is an obligation to make sure it stays disproportionately in their hands.

If the people are to bear the risk, it is the people who are to reap the reward.

Capitalism. That’s what they call it. And what these banks want? Welfare.

How bizarre things are when the tables are turned. Now Yes is No, and No is Yes, and 1+1=3. The last thing we want to do is help out Big Brother. Power and wealth should not remain so concentrated. It is not justified, and inevitably crumples under its own weight.

The whole justification for concentrated wealth is unraveling at the seams. People MUST be rewarded for creating value. But for juggling money? Who cares. Its a game for a score, kept with money. They lost. Let’s rewrite the rules more equitably for everyone, rewarding responsible capitalism and letting these jugglers’ balls fall where they may.

Private, highly knit parties should not be in charge of national resources to this degree. How did it ever happen that private parties gained such control over our national resources and lives?

They have power. They lost it. We should use this to regain power over our own lives instead of leaving it up to financial jugglers who simply lay claim to our lives.

Why, may I ask, were they ever given this power in the first place? Will they next claim air and charge us for it? You bet they would if they could, just as Bechtel tried to claim rainwater and Monsanto claimed corn because their genetically enhanced pollen blew to and intermixed with a neighbor’s cornfield.

Wealth is great, but we all made America. Wealth is great, but is too concentrated, because those who have wealth and power use it to gain more wealth and power. Then they use that wealth and power to gain more. That is the goal, isn’t it?

Meanwhile they pay us 80% of what we need to live so we need the rest on credit and owe our souls to the company store.

In the process of wealth generation they forgot about the 99% that was necessary to actually do the work. If their house of cards subsequently falls in their game, the last thing we want to do is keep them in wealth and power.

Initiative, effort, and risk should all be rewarded, but we all built America and it is time we expected a living wage, educational opportunity, and health care so we can be free from the necessity of usury and lifetimes of obligation to the upper class.

In no way do I support reward without effort or disparage capitalism and wealth. It is simply that we all sacrifice and all deserve to reap the rewards.

And when the people can be in control, like now, the last thing we want to do is hand the ball to the rich kid who had it, generally from birth, but lost it irresponsibly.

David Enriquez
Comment on September 24th, 2008.

Hi Will,

There is no doubt that greed and lack of ethics have both lead to this financial crisis. If the government is going to guarantee funds, then it should have had regulation in place insure that taxpayer money would not be put at risk. But the fault does not just lie with the financial institutions.

In trying to understand the financial crisis we are in, one needs to understand new financial instruments such as derivatives, Collateralized debt obligations, traunches, and Credit Default Swaps. I don’t pretend to understand these instruments except that they all seem to hinge on the fact that we, the American people, are living beyond our means.

Yes we need regulation to control greedy companies that prey on ignorant people, but in many cases the basic problem is that we lack the moral fortitude to pay the mortgages that we contracted to pay. Yes there are some instances where people have lost their jobs or had a medical calamity that make paying these contracts impossible, but that is the exception not the rule. In most instances people are living beyond their means buying a big house they neither need nor can afford, or have taken out loans against the value of their homes that they no longer are willing to repay.

We need to take responsibility for our actions, pay our debts as contracted, regulate greedy businesses that prey on ignorant people, better educate our children and adults in financial matters and not leave our debts for our children to pay. I don’t know whether the world regards us as greedy or stupid, but surely we can do better than to rob from our children.

Comment on September 24th, 2008.

In you statment you claim:
“I was present when some of our biggest financial institutions were training their sales forces to sell sub prime debt while they explained it would slice and dice parts of risk-drenched loans into a variety of investment portfolios until the risk of any single loan disappeared.”
During these training sessions, did you speak-up? Why were you there? We are always being asked to “take a stand” – do you?
Steve Gillis
Brookfield, MA

Comment on September 24th, 2008.

Great post, thank you. Here is my two cents worth: It is naive and overly simplistic to blame the President for this mess. It took a generation or more for this to develop and many people have thier fingerprints on the knife. It seems people always need a person or a segment of society to blame. It makes us feel better. Lets not make this political. I don’t see anything changing until we recognize that “they” are us and vis versa. We get the government that we deserve and allow, simple as that. As painful as things may get going forward, in the end we may be a better country for it. Lets hope so.

Comment on September 24th, 2008.

I have very little confidence that this $700 billion bailout will do anything but fleece ordinary Americans out of their tax money. We are heading into a financial crisis and this bailout won’t stop it. It may slow it down for a few years, but it won’t stop it. In the end we will be so buried in debt that the whole financial system as we know it will just grind to a halt. The only thing that can change this is feeling the full brunt of the financial pain of the greed and stupidity Wall Street has brought upon themselves. Putting a $700 billion dollar band aid on this will just let the same greed and stupidity to run a muck a while longer until they hit the wall again, after the $700 billion dollar corporate welfare money has dried up.

Like when dealing with any addiction, sometimes the most compassionate thing you can do is let them hit bottom as that is the only way they will change.

Comment on September 25th, 2008.

Many excellent and accurate points made. I wonder if there is a mathematical formula that can measure what percent of the population our few comments here would actually represent? But that i see as one of the problems, too many passive and uninformed citizens who just sit by and don’t do or say anything.

A few key points. Risk vs. Reward, yes those who take the biggest risk (WE THE PEOPLE) should get the biggest reward for putting up the funding. Will we? probably not if Congress and the 1% at the top of the wealth pyramid have anything to do with it. Fiscal Responsibility is both personal and institutional. We have to know what we are doing with our money and finances and then that must be properly executed with any financial institutions we deal with by demanding fair and legal business agreements and responsible business practices towards customers. Next, it is now a given, at least in my mind, that Congress with its current structure and rules of conduct and ethics is no longer an effective organization to act as the true representative of the people as opposed to the lobbyists and special interests representing the top 1%. We need to reform Congress and politics, and politicians.

The point about addiction made earlier is true, this short term focused, make money at all costs approach has become an addiction and it needs our version of a 12 step program to straighten out those who would move forward behind closed doors in the business as usual mode and the hell with the majority who are providing the funds. The rich/poor gap is constantly widening and the majority is taken for granted, this being the biggest example. When Warren Buffet supplies $5 billion to Goldman Sachs, I guarantee he covered all of his risk with very ample potential rewards. That is what we need to demand from Congress. And notice also in this case Congress is moving faster (in fact too fast) than they ever do on anything. It is CYA time in Washington. We must demand also proper assessment of the reality of the situation not just the sky is falling alarm call of Mr. Wall Street (former Goldman Sachs)Paulson. Does anyone in Washington have any specific facts? Not that you could tell from any interviews I saw yesterday. Congress is part of the problem, not the solution except to give away all of our money without any due diligence and a reasonable risk assessment and deal agreement with str8ct payback terms.

Comment on September 25th, 2008.

A large part of today’s problem originated with the repeal of the Glass Steagal Act in 1991 which removed the division between commercial and investment baniing.

Comment on September 25th, 2008.

I am really tired of hearing the “look in the mirror” to see who is to blame. This is propaganda being crammed down our throats by the same people responsible for this mess. Our “means” have been steadily shrinking, and predatory lending has become the “means” by which we have been forced to feed our families and/or pay for medical bills. Our elected officials do NOT represent the people because they are paid for by the time they get into office.

If this crisis is due to the overextension of credit to the American people, then HOW does it make sense to give money to banks to keep them solvent so that they can lend Americans more money???: HELLO??

It seems to me that we need to start producing more, and the only way to attract foreign investment is to STOP playing the “shell game” with the american dollar.

It is time to get real and face our fears. How can consumerism be the foundation of an economy.
Let the damn thing melt down and imprison the criminals.

I like the idea presented above of skipping the predators and just give me my protion of the bailout money and let me invest it in perhaps something that will produce. I promise I won’t loan it to someone less fortunate than myself, charging them usurious interest, and call that producing something!

Some great comments people, it seems we understand the problem. Now to effect change…

Comment on September 25th, 2008.

HMMM come to think of it, I really like this “local bank” or CU idea. Maybe that local bank could then invest in local farms and industry infrastructure, then I could buy local grown produce and milk etc…. Hmm this sounds too easy…… forget “Mr. Smith goes to Washington” we need Mr.Smith to step up locally.
Screw Washington/Wallstreet it is time to go local!

Comment on September 25th, 2008.

My last comment. Well the rush to judgment has happened. Just when will we see the results, your guess is as good as mine but probably not until after they have approved it if recent history is any judge. One question: what will be the consequences to the members of Congress if they have totally made a very bad decision on this matter vs. the consequences on the American taxpayers if the members of Congress have made a very bad decision? I think we all know the answer to this one and that is why Washington needs total comprehensive transformation and not just change. If we suffer as a result of ill conceived and poorly executed decisions they must also suffer along side of us and to an equal degree.

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