Why do Bay Area banks have an image problem? Perhaps it is the result of the misdeeds of large Wall Street financial institutions. Their bad behavior tends to influence how we see all banks; they all lack a moral compass. According to American Banker’s Tuesday, October 1, 2013 edition, Citigroup, www.citigroup.com, is paying Freddie Mac, www.freddiemac.com, $395 million dollars to repurchase flawed mortgages it sold to Freddy. In 2011, Bank of America, www.bankofamerica.com, repurchased $1.2 billion in defective mortgages it sold to Freddie and the Bay Area’s own Wells Fargo Bank, www.wellsfargo.com, has settled with Freddie for $869 million in bad mortgages Wells sold to Freddie Mac prior to 2009. JP Morgan Chase, www.chase.com, is really on the hot seat with a Department of Justice criminal investigation into its mortgage backed securities sales. There is no finalized fine amount for Chase yet, but speculation in the business journalism community suggests the possibility of an $11 billion fine. $11 billion, that has to be a record of some sort. No doubt whatever the amount, it will be paid and likely we will hear the usual canned revisionist history, “These events occurred prior to the rigorous controls we now have in place. We value our customers and shareholders, blah, blah, blah”. Where is the outrage, the call for CEO’s and their management teams to resign in disgrace, shareholders voting the rascals out? Have we become so numb to bad behavior that we accept it, perhaps even expect it? Remember about a year ago there was Move Your Money Day? That day provided an opportunity to vote with your feet and your money by removing it from one of these financial behemoths and waking it over to a local Bay Area community bank. The benefits of community banking were extolled; locally owned, accessible managements, personal service, quick problem solving, many of the same products and services offered by big banks and if you or your business ran into trouble, seizing your collateral was the last option instead of the first. Community banks like Summit State Bank in Sonoma, www.summitstatebank.com, headed by Tom Duryea, Heritage Bank of Commerce in San Jose, www.heritagecommercecorp.com, run by Walt Kaczmarek or Bank of Rio Vista in Rio Vista, www.bankofriovista.com, led by Dave Greiner. These gentlemen are successful CEO’s and well known and respected in their local communities, not just for their trustworthy banking skills but as contributing members of their communities It is safe to say that the only fines these bank CEO’s may have paid are for expired parking meters. Don’t you just hate when that happens. The formal Move Your Money Day has come and gone, however with every new revelation of big bank malfeasance every day is the right day to move your money.
October 4, 2013