Here’s what I’m ashamed of: Chase Bank. More specifically, I’m ashamed of my continuing relationship with Chase.
When I was sixteen or seventeen, my dad got me a credit card from Bank One to help me “build my credit.” JPMorgan Chase bought Bank One in 2004, which was fine with me, because at that point I already had a mortgage with Chase–all my accounts were now with Chase, which makes online banking a breeze. Oh man, they have good online banking.
Up until a few months ago I had loans on two homes, a home equity line of credit, a business account (with an IOLTA account), a checking account (with sub accounts), a savings account, and two credit cards with Chase. I still have a lot with Chase, which is sort of what I want this essay to be about, but I have refinanced both home loans with local banks: First Citizens Bank and Huntington Bank.
I am uncomfortable with my continuing relationship with Chase; I am ashamed of it.
Idiocy and Hubris
My discomfort first arose when Chase started suing my clients at Legal Aid Society. For two years, I defended homeowners from foreclosure for Legal Aid. We hosted clinics for struggling homeowners twice a week: Tuesdays at 11:00 and Thursdays at 5:00. Each month, I probably talked to thirty or forty homeowners. Sometimes less; often more. Many of these people were also customers at JPMorgan Chase.
And they told awful stories. Stories typical to the foreclosure crisis–JPMorgan Chase is no worse an actor than most big, national banks in the years leading up to the crash and the years following, but its no better, either.
Homeowners calling Chase to apply for a loan modification only to be encouraged to miss a payment because you “have to be behind to qualify”. (You don’t.)
Chase losing paperwork that was sent certified mail (because the first set had also been lost).
Chase telling homeowners to pay a reduced amount for months on end to qualify for a loan modification, then Chase not modifying the loan, then Chase claiming the person was thousands of dollars behind and needed to catch up immediately or face foreclosure.
Defending useless and unnecessary suits brought by Chase took some (all) of the shine off Chase for me. But, it wasn’t just the suits. It was their suit, CEO Jamie Dimon, testifying in front of Congress, without trying to be funny, that financial crises are “the type of thing that happens every five, ten, seven years”.
How’s that for preposterous hubris? Yet, I know that my decision to bank with them is a tacit endorsement of their actions and words. So, for the past three years, I have been squirming about my banking situation.
A Right-Sized Solution
It wasn’t just the suits or their suit. It was their size. Like most Americans, I find the concept of “too big to fail” antithetical to our meritocracy.
In Small is Beautiful: Economics as if People Mattered, E.F. Schumacher discusses the problem of the need for both largeness and smallness in human organizations. His goal is to encourage right-sized organizations for the problem the organization exists to solve.
What I wish to emphasize is the duality of the human requirement when it comes to the question of size: there is no single answer. For his different purposes man needs many different structures, both small ones and large ones, some exclusive and some comprehensive. Yet people find it most difficult to keep two seemingly opposite necessities of truth in their minds at the same time. They always tend to clamor for a final solution, as if in actual life there could ever be a final solution other than death. For constructive work, the principal task is always the restoration of some kind of balance. Today, we suffer from an almost universal idolatry of giantism. It is therefore necessary to insist on the virtues of smallness–where this applies.
I keep my money at a bank that is too big for its own good. For our own good. I have known this for some time, yet the lock-in at Chase is enormous: I pay all my bills online (at chase.com); I can transfer money among my accounts at one website (chase.com); and my debit card and credit card are stored with hundreds dozens of online vendors, some of those debiting automatically each month.
This is all to say that what I’m doing is wrong. Chase Bank is too large; it is a product of our worship of giantism. There is no reason that I should keep my money with one of the largest banks in the world. Any bank I would put my money in will be FDIC-insured up to $250,000 and I’m a long (long) way from having to worry about what to do with the next 250 grand.
I know what I’m doing is wrong, yet I have been lazy, complacent, compliant.
Continuing to bank with Chase is not just a bad decision because it’s a tacit endorsement of the bad acts of Chase and the hubris of its CEO. It’s also supports bad policy.
Robert Reich has articulated the need to limit the size of a bank’s assets as the only way of limiting the amount of risk to the broader financial system and world economy.
Needless to say, the danger of an even bigger cost in coming years continues to grow because we still don’t have a new law to prevent what happened from happening again. In fact, now that they know for sure they’ll be bailed out, Wall Street banks – and those who lend to them or invest in them – have every incentive to take even bigger risks. In effect, taxpayers are implicitly subsidizing them to do so. (Haldane figures the value of that implicit subsidy to be about $60 billion a year for each big bank.)
As long as the big banks are allowed to remain big, their political leverage over Washington will remain big. And as long as their political leverage remains big, the taxpayer and economic tab for the next mess they create will be big.
By all means, give regulators resolution authority and also impose the tightest regulations possible. But Congress and the White House shouldn’t stop there. Limits should be placed on how big big banks can become.
How big? No one has been able to show significant efficiencies over $100 billion in assets. Make that the outside limit.
Reich suggested this in 2010 and there’s been no move from either Congress or the White House in this direction since then. I think it’s safe to say that we can expect no action from Washington to limit the size of banks for at least another five years. That’s the bad news.
The good news is that we don’t need Washington in this instance. We can limit the size of our banks’ assets ourselves–by moving our assets to smaller banks. Sure, it would be easier if 536 people got together and did something, but they’re not going to and we (millions) can. When shopping for a new bank, I will ask whether they have assets exceeding $100 billion. If they do, that’s a deal breaker, ladies.
Why Doing Something Matters
The problem with continuing to lend my money to Chase (and allow them to lend me money), is that I believe that decisions about money–how you make it, how you spend it, how you save it–are fundamentally moral decisions.
Growing up, my dad had a coffee mug that said, “Talk is cheap.” On the other side of the mug, it said, “Until you hire a lawyer.” He had to explain the joke to me. Now, even though I’m a lawyer, I think talk is always cheap. I guess you could say I’m a James man:
Faith without Works Is Dead
What good is it, my brothers and sisters, if you say you have faith but do not have works? Can faith save you? If a brother or sister is naked and lacks daily food, and one of you says to them, ‘Go in peace; keep warm and eat your fill’, and yet you do not supply their bodily needs, what is the good of that? So faith by itself, if it has no works, is dead. James 2:14–17.
If you’re the sort of person who cares at all about the direction of our country and our culture, if you want something different than what currently exists, you have to recognize that decisions about what to do with your money either sustains or starves that vision. Choosing between buying a tomato from California and one from Kentucky has a direct impact on which farmer puts another tomato seed in the ground next year. Choosing to buy a new car or a used car affects how many new cars roll off the assembly line. Buying an ebook versus a paper book changes what the book industry looks like.
It’s the same way with where you keep your money. As someone who has grown deeply skeptical of the prudence of our giant banks, as someone who is outraged by their continuing rapaciousness and imbecility during the foreclosure crisis, I can no longer continue to lend them money and allow them to lend me money. If I want a different kind of banking system, I need to move my money to a different kind of bank.
Talking about this with a friend, he reminded me that any bank is going to screw me. That’s probably true. But, if I eventually want the option of banking with a bank that doesn’t screw me, the first step is moving to a bank that is going to screw me less.
But, my little bank account doesn’t matter
I have also justified my inaction by rationalizing that, well, my bank account is so small that where I keep it doesn’t make a difference. This fails for two reasons. The first is obvious: if everyone with a tiny bank account moved their money to a more just institution, the effect is not so small anymore. Now we are getting somewhere. As the Amish say, “Many hands make light work.
Even if no one joins me, it’s still important to move my money. Especially important. Failing to do so risks forgetting who I am, of changing who I am. Being true to yourself is a muscle you train; it knows strength or atrophy. I know that moving my money to a bank that doesn’t foreclose blindly on my neighbors is the right thing to do. I know there are banks that are run by men and women less blasé about the financial crisis it helped create than Jamie Dimon. I know that seeking a relationship that is, at minimum, less exploitative reinforces my values. The act of moving banks will remind me of who I am and what I believe. It is simultaneously a product of who I am and constitutive of who I will become.
More dangerously, failing to act in this instance will make it easier to justify failing to act in the future, perhaps when the stakes are slightly or significantly higher. Failing to act in the face of small injustices is how people learn to fail to act in the face of large ones. This thought, more than any, is enough to scare me into action.
I’m scared. Are you?
Growing up, I had this sense, unspoken because it was so woven into the fabric of my existence, that grown-ups were taking care of things. And, for the most part, this was true as far as I knew. My parents took care of business. It has only been recently–far too recently–that I had the terrifying and exhilarating realization that grown-ups are just as clueless as the rest of us. Comments like Jamie Dimon’s were very useful to this process (commonly known as maturation).↩
Schumacher, E.F. Small is Beautiful: Economics as if People Mattered. New York: HarperCollins, 1989, p. 70.↩
There is not, as far as I can tell, an easy solution to this problem of lock-in. Especially among local banks. I have found some who seem willing to help you (manually?) transfer your online bill pay to their website, but moving still means tracking down all of the online vendors (iTunes, Amazon, eBay, REI, software developers, web hosting, bar associations, charities, and on and on), changing those accounts, forgetting a few, and having a few bills (how important?) drop through the cracks. (The bank that solves THIS problem and brings their solution to market? Wow.)↩