They’re just not that into you.

End the abusive relationship: just break up with your bank (do it for America)

I hate to say it this way, but they’re just not that into you.

Chances are, you’re in an abusive or lopsided relationship with your bank, and should really re-evaluate with your own best interests in mind.

There are a few things I’d like to talk about in this post, with just one major call to action that will (unfortunately) be a bit of a pain, but should be so, so worth it.

  1. Banking itself is not bad.
  2. There are a lot of bad banks. What they do is bad, and they should feel bad.
  3. Things that good banks should do.
  4. What YOU can do for yourself (and America), TODAY (assuming it’s a weekday between the hours of 9am and 5pm).

Banking itself is not bad.

Just like people, not all banks are bad; there are just a few who make the whole pot look terrible. Those who know me might think I just contradicted my last 6 years of rhetoric, but we’re going somewhere with this.

For the purpose of this post, I’m just talking about a really narrow fraction of what people usually attribute to some place being a “bank”. That is: the basic holding and lending of money to people. Not investments. Not trading. Just basic banking. It’s a place to send your paycheck, get simple loans, mortgages, etc. I say “simple” specifically because most people just don’t need anything very complicated. If you can’t easily understand something being sold to you, guess what — that person’s probably not looking out for you.

Within that narrow scope, I can happily say there are thousands of great banking institutions in the US that perform their services admirably and without conflict. The problem is, you probably can’t name many of them, because they’re all really small. They’re commonly referred to as “local banks” or “community banks”. Credit unions are similar, and for this argument it’s fair to lump them in.

The point is: they’re small, they serve a focused population, they likely have roots within their communities, and they actually have to work hard to maintain trust and do a good job. They have to do those things, or they’re more likely to go out of business. It’s possible to say, “I trust what my bank is doing and know they have my personal best interests at heart,” because what they’re doing isn’t all that complicated, and it’s very visible. In some cases (credit unions), simply by being a customer, you have a stake so it’s naturally incentivized to do right by you. Imagine that.

This is not at all to say that community banks and credit unions are universally good, simply that it’s way less likely that you’ll be worried about what they’re doing when your back is turned. Never stop being vigilant in evaluating how well your bank is serving you, and how well it represents your priorities and values (this is more important than you think! More on that below).

There are a lot of bad banks. What they do is bad, and they should feel bad.

Unfortunately, the hydra-headed monstrosities you might think of as “banks” that you probably have heard of do a lot of other stuff that can put you in financial risk, or at the very least do things you’d probably think is downright evil.

I’m going to list a few things that make no sense next to each other:

  • managing personal checking accounts
  • bankrolling an oil pipeline
  • high-frequency trading of foreign currencies

So why the hell does one institution need to do all of them? Why does my money need to be lumped in with all of that? How does that benefit me? (Hint: it doesn’t). Are they always upfront with you? Is what they do with your money clear to you? If not, it’s possible there be dragons.

Here’s a list of institutions and awful things they did. If you use any of them for your checking/savings, read it knowing that they did these things with your money.

I was going to make that list longer, but it’s already really bumming me out and redundant to the point I’m making.

Where do you think they got the money they used to make those original investments in the first place? Your deposits. Here’s how the process goes:

  1. You work hard all the livelong day.
  2. Let’s say twice a month you get a direct deposit into your bank account (yay!).
  3. Let’s say you’re a responsible adult and that doesn’t all immediately go towards credit card bills (ha!).
  4. There’s now money just sitting there. How tantalizing.
  5. JP Morgan’s analysts (who likely get paid more than you do) analyze your spending patterns to figure out how much of it they can loan out before you ask for it back.
  6. They spend your money, hoping to earn back more than they spent before you ask for it. They may bet against you directly, against your interests, or at the very least, into things that carry more risk than is safe (Seriously, 2008. How the hell do people still think “big banks” are trustworthy the way they currently operate?).

Just to cover my bases, small banks do this stuff too, but they’re more likely to be smaller bets (e.g. regular business loans) that are less risky, and less evil.

Things that good banks should do.

Once your hard-earned money is safe in your bank account, there are things that banks can (and should!) do with it that fall well within the purview of “being a good, decent bank”:

  • Loan it to someone on fair terms to buy a house.
  • Loan it to someone on fair terms to start a business in your community.
  • Buy municipal bonds from your city to support more community development.
  • Give people modest amounts of credit on fair terms to have a little bit easier time going about their daily lives.

That list is incomplete, but you get my drift.

Note the key points in there: “fair”, “community”, “organic”, “locally-sourced”, “gluten-free”. All things we can agree with, and that we can see directly come back to benefit us. Who doesn’t want to see their communities grow, assisted by people who live in that community and understand it?

Things that banks should not do.

  • Spend people’s money in ways that are vastly disconnected from the reason the bank was entrusted with it (e.g. using basic deposits to finance high-frequency trading).
  • Spend people’s money on political influence those people may not agree with.
  • Wear white after labor day.

This shouldn’t be that complicated.

Now, maybe a “big bank” is actually good at everything across the board and wants to play on all the fields. Fine. Let’s just go with that fantasy for now. That’s probably ok as long as they keep the activities separate. I don’t want CDOs and other derivatives anywhere near my deposits. They have cooties, and that stuff just sticks on you, right into your debt-laden grave.

Now, if only someone would write some nice legislation we could get in place to keep disparately risky activities separate from one another.. oh, I don’t know, 84 years ago. In response the Great Depression. That one. The one where everything got all f**cked up and really hurt people. AGH!!!

What YOU can do for yourself (and America), TODAY.

Unfortunately, most things in financial services are really far from relevance (or affordability) for most people, and we just get to deal with the hand we’re dealt.

Well, my friend, today you are in luck, for I have a solution for you. If you have your checking/savings at a “big bank”, just leave and switch to a local bank. Seriously, that’s it.

Sure, your dent will be small, but this is the kind of thing that accumulates. It’s a death of a thousand cuts for the “big bad banks”, because there unfortunately aren’t any bigger institutions to put them in their place. We have to do it ourselves. You might think that the government could intervene and fix things, but, you know, *gestures broadly at the current situation*.

I do have to admit that switching banks can be a pain. You need to find a place and physically go during business hours, but it really is worth your time. It’s not complicated, it’s just a little bit of effort and organization. To get you started, here are the exact steps I took to switch — all of them.

  1. Pick one (for me, New York Community Bank).
  2. Walk in, find the closest person, and proclaim, “JP Morgan is evil. I wish to leave them and set up new accounts with you folks please.” They will knowingly chuckle.
  3. Basic paperwork. Street you grew up on, your best friend from elementary school’s dog’s maiden name, etc.
  4. Switch your payroll to deposit into your new account(s).
  5. Switch any connected services (like PayPal, Venmo, etc) to the new accounts.
  6. Transfer all of your money from your old bank to your new bank (this is it! here we go!).
  7. Switch any other bill-pay you have setup to come out of your accounts.
  8. Put on your most smug, self-satisfied facial expression and call up your old bank. Then take the expression off and be a nice person, because whoever you’re on the phone with didn’t do anything wrong. Politely ask them to close the accounts.

Then you (and the rest of America) are just a little bit more free. Doesn’t that feel good!?