Banking with heart

Banks are going from bad to worse, it appears, as more and more of their shenanigans are revealed in the press.  Not only did they give into greed and risky speculation over the last several years, leading us into this current economic crisis, but they have also apparently not yet learned their lesson.  They continue to exhibit a sense of entitlement, keeping taxpayers’ bailout money for themselves, rewarding those at the top.  Meanwhile those at the bottom, in need of credit, suffer.  

Is it possible for the banking industry to have a heart?  Can bankers shift paradigms?

The old, heartless, self-serving paradigm of banking has proven to be bankrupt.  No longer can we trust, if ever we could, that the old banking paradigm has the common good at heart.  The paradigm of banking that funnels wealth to the top has collapsed under its own weight. The banking industry appears to be flailing about, unable to stabilize itself enough to discover a new paradigm, to find a new way forward.

But a new paradigm of banking is right before its eyes, if only the leaders of the banking industry could have eyes to see. 

Wainwright Bank in Boston has been leading the way in banking that serves the common good for the past twenty years. Because of Wainwright’s values of investing in the local community for the past twenty years, the bank has built strong partnerships, including lending to nonprofits who have proven extremely reliable in repaying their loans.  Wainwright Bank long ago discovered a paradigm that has proven both profitable and values-centered.  What once appeared radical to skeptics in the banking world might now be considered conservative, in terms of reliable return on investment.

Furthermore, because of its commitment to serving the common good, Wainwright Bank was not tempted by the things that got other banks into trouble.  Wainwright offered no sub-prime mortgage loans, nor did it bundle together people’s mortgages and sell them in risky speculation.  And Wainwright’s approach has paid off.  At the end of 2008, Wainwright boasted a strong fourth quarter, with net income rising 5 percent.  For the year, the bank’s assets increased 15 percent and deposits increased 16 percent, and all this in the midst of a climate of turbulence and collapse in the banking industry. 

A new paradigm for banking, with proven results, stands before the banking industry. The old, heartless, profit-before-people model of banking needs to die a natural death.  It’s time to open the way for the bankers with heart of the world.

(If you enjoyed this article, check out Banking on values and Goldman Sachs investment bank held accountable for subprime lending and Fiddling while Rome burns.)