The Cambrian

Viewpoint: Fuller portrait of local banks would have included the shadows

Considering the fact that the economic downturn/ Great Recession has been, to a large extent, caused by the banks and mortgage companies which loosened up their housing loan criteria, Vicki Clift’s basically uncritical profiles of our three local banks (April 8, “We’ve got three branches: You can bank on it!”) seems remarkably unastute.

Need I remind Cambrians that only a year or so ago some of the nation’s largest banks — including B of A— were on the

verge of going bust — were it not for bailouts. This necessitated a rethinking of where people should put their hard-earned liquid assets, and recently I’ve noticed that banks are quite willing to take our deposits and give very little interest in return for them.

Basically, banks are a very poor place for your increasingly devaluing dollars, until CD rates rise considerably (for comparisons, check

Clift should have noted that Rabobank is considered by the Global Finance rating organization to be the fifth-safest bank in the WORLD (mid 2009 review). B of A, once in the top 50, has fallen off the list. (The only U.S. bank in the top 25 is Wells Fargo, at No. 21.) Smaller banks like Heritage Oaks may not have the assets and offices to be on such a list, but they do try hard to offer better local loan services (and higher CD rates).

Arianna Huffington is leading a nationwide movement to encourage everyone to take their money out of big banks (which to a large extent were the cause of the sub-prime mortgage crisis) and put it into small community banks. Small community banks are generally more receptive to funding local agriculture and small business start-ups, anyway.

As for B of A, I have little good to say about them. They were the least receptive bank until very recently to pursue loan modifications for people threatened with foreclosures — under pressure from regulators they have now offered a 30 percent principal reduction program in some cases.

They foolishly bought Countrywide’s sub-prime assets. They have interests in blowing up mountaintops to get to coal deposits. They were in the forefront of credit card abuses (such as arbitrarily raising interest rates) until the recent Obama-inspired credit card reform law.

Some of this has been discussed in my book, “Crisis Investing and Entrepreneuring.” There is local example of someone moving from a big bank to a community bank.

It is time we did some critical thinking about which banks and investments make sense to get involved with now that “everything has changed.” It certainly doesn't surprise me that most big banks don’t want columnists like Vicki Clift to find out what is really going on.

Cambria resident William L. Seavey, author of "Moving to Small Town America" (Dearborn Financial), recently published a book (available at Cambria Business Center) on how boomers and others can protect their assets during (and after) the current economic downturn.