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Featured Article filed under Banking | Written by Olivia LaVecchia | 1 Comment | Updated on Oct 8, 2015

A Tool to Find Banks that Invest in the Local Economy

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/a-tool-to-find-banks-that-invest-in-the-local-economy/

The reasons to choose a community bank or credit union range from getting the same services at a lower cost to supporting productive investment instead of speculative trading. But while it’s one thing to think about the qualities that are important in our banks, it’s another to find particular local banks that are enacting them.

A new tool, called Bank Local, aims to make that process easier.

Bank Local maps every banking institution in the U.S., and uses data from three federal agencies, plus its own algorithm, to assign them a Local Impact Rating. Users can type their address into a bar on the site’s homepage, and find a map and list of how nearby financial institutions compare.

The project was created by Bob Marino and Nick Plante, who initially schemed it up as a tool for their own area. Both are board members of Seacoast Local, a local economies non-profit that works in eastern New Hampshire and southern Maine. They wanted to come up with something to help people move their money to a local bank or credit union, and take what they describe in an early post on their website as a “small, pragmatic action” against “the problem of Bigness in banking.”

“We thought that one of the venues for change would be to put that information out there for consumers who care about these issues,” Marino says.

Working with experts, including Stacy Mitchell here at ILSR and the economist Olga Bruslavski with the National Credit Union Administration, they came up with criteria to quantify a bank’s local impact. They decided on seven: Small business lending, location of headquarters, branch concentration, bank ownership, bank size, small farm lending, and speculative trading.

Take small business lending, the factor that Bank Local weighs most heavily. Small businesses, which create the majority of new jobs, depend heavily on small, local banks for financing. In 2014, even though community-based financial institutions controlled just 24 percent of all banking assets, they made 60 percent of all small business loans. As the banking sector has become increasingly concentrated, small businesses have had a harder time accessing the capital that they need to grow.

In Bank Local’s algorithm, if a bank dedicates 20 percent or more of its total assets to small business lending, it earns three points toward its total score and is marked as “outstanding” in that category. The lowest tier is for banks that devote less than 5 percent of their total assets, which receive a score of zero and a rank of “insignificant.” In Oakland, Calif., for instance, Mission National Bank uses 24 percent of its assets for lending to small businesses, and none for speculative trading, which helps it earn a high overall score for local impact. Citibank, meanwhile, deploys just 1 percent of its assets for small business loans and 9 percent for speculative lending.

Once Marino and Plante had come up with the criteria and the algorithm for scoring, they were able to expand their new tool to cover the rest of the country. They pulled all of the data they needed, and then used a service that geolocated every financial institution. Continue reading

Map: Number of banks by state.
Featured Article filed under Banking | Written by Stacy Mitchell | No Comments | Updated on Sep 1, 2015

How One State Escaped Wall Street’s Rule and Created a Banking System That’s 83% Locally Owned

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/map-shows-how-well-the-bank-of-north-dakota-works/

In North Dakota, the banking sector bears little resemblance to that of the rest of the country. North Dakotans do not depend on Wall Street banks to decide the fate of their livelihoods and the future of their communities, and rely instead on locally owned banks and credit unions. With 89 small and mid-sized community banks and 38 credit unions, North Dakota has six times as many locally owned financial institutions per person as the rest of the nation, and these institutions control a resounding 83 percent of the market. Much of the difference is owed to the Bank of North Dakota. Continue reading

Photo: Community Bank Borrowers
Featured Article filed under Banking, Independent Business | Written by Stacy Mitchell | No Comments | Updated on May 5, 2015

One in Four Local Banks Has Vanished since 2008. Here’s What’s Causing the Decline and Why We Should Treat It as a National Crisis.

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/vanishing-community-banks-national-crisis/

The precipitous decline in the number of community banks in recent years is a national crisis, and there’s a fierce debate underway right now about what’s to blame. Continue reading

HillaryClinton
Featured Article filed under Banking | Written by Olivia LaVecchia | No Comments | Updated on Jul 17, 2015

Why Glass-Steagall Should Be a Key Issue During the 2016 Campaign

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/why-glass-steagall-should-be-a-key-issue-during-the-2016-campaign/

In a 2016 campaign season already dominated by candidates’ pursuit of Wall Street donations, how to regulate the banking sector remains one of the most pressing issues facing the country. The Glass-Steagall Act is becoming, and should remain, a key part of the debate. Continue reading

Chart: Share of Loans Made to Small Businesses, 2014.
Featured Article, Resource filed under Banking, Independent Business | Written by Olivia LaVecchia | No Comments | Updated on Apr 20, 2015

Small Business Lending by Size of Institution, 2014

The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/small-business-lending-by-size-of-institution-2014/

In 2014, community-based financial institutions made 60 percent of all small business loans, even though they control only 24 percent of banking assets. Continue reading