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Why a Credit Union is Much Greener Than a Bank

Why a Credit Union is Much Greener Than a Bank

These days, it’s almost impossible not to feel angry about the role that Wall Street and the Big Banks have had in crashing the economy and tanking the housing market. We seem to be living in a Robber Baron-era paradigm wherein the harder Americans work, the more into debt we collectively descend.

While Bank of America, BB&T, Citigroup, Chase and their friends gave themselves grotesque raises and bonuses paid for with taxpayer bailout money, Americans have endured their subprime mortgage fraud, merciless or even fraudulent foreclosures, and losing their retirement money, their jobs and their dignity.

And while most of us lose more of our health, wealth and security every day, Big Banks and Wall Street corporations are enjoying record profits that were basically stolen from the rest of us.

But if that isn’t enough to make you mad, you should also know that environmental and human rights violations are widespread within the banking industry due to the unsustainable (and often downright immoral) way in which they invest your money in order to make a profit for their shareholders.

According to Green America, the worst social and environmental offenders are Citibank, Bank of America, Fidelity, JP Morgan, Vanguard, Suntrust and Wells-Fargo. But many other larger and mid-sized banks are pretty dirty, too.

For example, speculation in China’s oil industry—whose proceeds directly fund the Sudanese army and Janjaweed militia which carries out the genocide in Darfur—is perhaps the most heinous of the banking industry’s recent investments.

Here in the U.S., Citibank and JP Morgan have been accused of helping Enron doctor its books. HSCB bank helped known drug cartels launder their money! These banks have also been criticized for profiting from apartheid in South Africa and supporting other abusive regimes around the world.

It seems that wherever in the world people and planet are exploited for the sake of the easiest profit, you’ll find a Big Bank in partnership with a corrupt regime.

Additionally, the banking industry finances development projects that are devastating to the environment but lucrative to shareholders, such as the construction of coal-powered energy plants, mining in the Amazon River basin, mountaintop removal projects, oil and gas drilling in pristine wilderness and tribal lands, and more. In fact, almost every major, for-profit, environmentally-destructive project on the planet was funded by Big Banks.

This means that Americans who bank at large institutions like Suntrust, Citibank or Bank of America, etc. are, in effect, funding these human and environmental atrocities.

To get away with all of this, the Big Banks also use your money to support policies, laws and candidates that deregulate their industry and protect their profit-at-all-costs agenda. How do you think we got into this mess in the first place?

But you don’t have to stuff your mattress with cash to escape the Big Banks and their shenanigans. Instead, you can do a lot of good with your money by investing it right in your community, right now.

Credit Unions

When I moved to San Diego, I was so happy to find that California has many credit unions. Most states do. Credit unions are financial institutions formed by an organized group of people with a common bond. There are credit unions for teachers, members of the military, people who live in a certain area—almost every affiliation you could imagine.

Members of credit unions pool their assets to provide loans and other financial services to each other on a not-for-profit basis. This allows credit unions to pay dividends to their members (not shareholders) and offer them lower loan rates, higher savings rates and fewer service fees. Credit unions have the smallest environmental footprint of all types of banks because they exist only for their members and are supported only by their members.

As opposed to large, national banks, you can be sure that the money you put in a credit union is not going to be invested in corporations that pollute the air and water, remove mountaintops for mining, make genetically-engineered seeds, tear down the rainforest, maintain concentrated livestock feeding operations, or anything else destructive that you might not want to financially support.

Here is why a credit union is better than a bank:

Credit Union – Member Owned

 

Bank – Private Corporation

  • Serve only members
 
  • In the business to make a profit.
  • Not for profit, not for charity, credit unions exist solely for service.
 
  • Serve two groups: stock holders and customers
  • Focus solely on serving their members.
 
  • Banks can serve anyone in the general public.
  • As a not-for-profit, any income is returned to members in the form of low or no service fees, lower rates on loans and higher deposit rates.
 
  • Only investors get a share of the profits.
  • Members elect a volunteer Board of Directors to represent their interests. Each member is an equal owner.
 
  • Have a paid Board of Directors who represents the investors. Only investors have voting rights. Customers have no voting rights, and have no authority in the governance of the bank.
  • Deposits are federally insured by the National Credit Union Administration (NCUA) to at least $250,000 and insured up to $250,000 for Individual Retirement Accounts (IRAs).
 
  • Deposits are federally insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC).
  • Like other not-for-profit institutions, credit unions are exempt from paying federal income tax. Credit unions do pay property and state taxes.
 
  • Like other for-profit businesses, banks must pay taxes to the government.
  • Financial cooperatives. Members pool their savings to provide low-cost loans and low-fee services to each other.
 
  • Commercial businesses. Banks offer services to make a profit.

State and Public Banks

Once you have moved your bank accounts to a credit union (or even a local, community bank in your town), consider advocating for the creation of a State or Public Bank in the state where you live.

The one state with the foresight to have their own bank and create their own credit (rather than beg Wall Street) is North Dakota: the only state with a growing budget surplus and low unemployment in THIS economy.

North Dakota is such a model for success that other states are working on opening their own state-owned banks, including Oregon, Washington State, Massachusetts, Arizona, Maryland, New Mexico, Maine, California, Illinois, Virginia, Hawaii and Louisiana.

In California, a State Bank would save about $5 billion in interest costs every year with at-cost credit. This would potentially re-hire 20,000 laid-off teachers at $70,000/year and still have $1.5 billion left-over. At-cost credit could also mean at-cost public mortgages (think 1-2% interest rate). Here’s a video about it:

Making a Difference by Opting Out

Opting out of the Big Banking system by using a credit union is a lot like opting out of the Big Food system by growing your own and buying from local small farmers. Both are necessary ingredients in creating a sustainable, more just society.

If you’d like to help end the irresponsible lending and gambling on human misery perpetuated by the Big Banks, and ensure that your money is only invested in sustainable, local projects, then vote with your dollars by banking at a credit union or community bank.

Then, go vote at the polls for the creation of a state-owned or public bank where you live.

You can find other ways to green your finances by visiting Green America.

This article was excerpted from my book Sustainability Starts at Home – How to Save Money While Saving the Planet. For more money-saving, planet-friendly tips, check out the book by clicking below.



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