Making some calls…
Today’s task is to call various banks (Banknorth, Wainwright, Franklin First, Santa Cruz Community Credit Union.) I’m asking them:
“I want to open an account, and I’m researching various banks/ credit unions. Can you tell me where the bank deposits are invested? What percent of the bank assets are given out as loans, and what percent are invested? Who decides where to invest the money?”
First, Wainwright: 1-888-428-BANK
The automated voice speaks Spanish and then English during the opening message. Plus, some salsa-ish music while you wait.
I was transferred to George’s office –George is in charge of investment relations.
George’s assistant answered my question about who decides where the bank should invest: the decisions are made by the president, chairman, chief financial officer, and George who does investment relations.
The assistant on the phone didn’t know where the money was invested or what percent of the total investments/ loans was to cool non-profits (they list a ton on their website…) but she suggested that I suggested I look at annual report, and the 10Q, both on their website. She is sending me a bunch of info, too.
Second, Franklin First Credit Union: 413-774-6700
The person who answered the phone said, “Martha, the CEO can answer that. She’s at a meeting.” I was able to leave a message on the CEO’s voicemail. I mentioned in my message that I recently met with one of the Board members. I also said I’d try her back if I didn’t hear from her.
The CEO Martha called me back a few hours after I left my message! I love that. She said that Franklin First invests in other credit unions and banks. They aren’t allowed to invest in mutual funds. She said they don’t have time to research where the other credit unions or banks invest their money…She invited me to call her back.
Me: Of the amount that is invested by the credit union, what % in credit unions, what % in banks?
Martha: A small percent is invested in other credit unions; the majority in banks. (She added something about credit unions not having rates listed…I should ask her about this again.)
Me: I assume in banks it goes into CD…
Martha: In both credit unions and in banks it goes into CD’s.
Me: You have to keep same fractional reserve as banks?
Martha: She wasn’t certain if it was the same…but they do have a fractional reserve requirement.
Me: Why do credit unions have tax-exempt status?
Martha: Credit unions formed at a time when [lower-income] people got money from loan sharks. To avoid the usury rates of the loan sharks, the people formed coops. The government felt it was the right thing to make these coops tax exempt since the credit unions were people helping themselves…
She recommended I look at the Massachusetts League of Credit Unions website.
Third, Banknorth, the Northampton branch.
The woman who answered said something about the Banknorth investment group making the bank’s investing decisions. And then she said he is based in her branch. And I said, “The investment group is a man? He is based there?” She said, “Actually he’s the western region rep; he comes to this office every once in a while.” She was a little unclear. Turns out he’s based in Pittsfield. His name is S. Morantz. 413 748 8278
I feel a little nervous calling him –funny, how easily I feel intimidated by a big bank. I noticed I worried he’d be angry with me, try to demean me for asking these questions. I didn’t have this feeling calling the other places.
Steve called me back a few hours later, too. Amazing. He was just as gruff and demeaning as I expected. And, as I suspected the woman who gave me his number misunderstood my question. Steve is trained as a broker and helps people invest their own money. He doesn’t help the bank invest its assets. Clearly, not many people call to ask where the bank invests its assets.
He didn’t know the answers to my questions but managed to avoid ever actually saying he didn’t know.
I asked where the Banknorth assets were invested. He said, “Restrictions are heavy. It’s not like Banknorth invests in Google.”
He said the bank tries to lend money to people. There are federal rules about needing to lend to low income people and to small businesses, and Steve thought Banknorth was chartered as a community bank. He said the bank sells its mortgages to other banks or mortgage companies. He kept saying there are rules. The bank most of all wants your money in checking so that it doesn’t have to pay interest. (Oy, that’s where my money is now at Banknorth. They do invest the checking account money. A while back, I had convinced myself that if I kept it in checking where I get no interest, they weren’t actually investing it and thus I was less complicit in a system I didn’t understand.) I asked if he had a guess about what percentage of the bank assets go towards lending, what percent towards investment. He said they try to lend, but I don’t think he knew.
I asked, “Who makes the investment decisions for the bank?” He said, “There is an investment committee. There’s not a lot of latitude given the investment regulations which are there so banks don’t speculate.”
Drawing on my Smithy research, I said, “I thought there weren’t that many regulations. I was actually wondering if banks did speculate on international currencies…”
Steve: “Well, speculating means lots of things. It’s different from hedging. Hedging is not speculation.” [So banks hedge?]
That’s the gist of what I learned from him.
He had asked why I wanted to know this. I said I was looking to open an account and wanted to be in the most ethical bank I could find. He said something sarcastic like good luck, it’s not an ethical system. But he also sincerely added that credit unions or small community banks would keep money local, though they would have fewer services.
Fourth, Santa Cruz Community Development Bank 831-425-7708
I love this place. They are a CDCU –I asked the man who answered the phone how being a CDCU is different from being a regular CU. He said the CDCI focuses on community development. Though other credit unions give business loans (and not all do, actually –Franklin First doesn’t) the Santa Cruz Community Credit Union has special loans and does outreach to low income and other underserved people. They are a nonprofit committed to social and economic justice.
This man put me on hold and asked the Director of Finance my questions. He came back on the line and said they try to make as many loans as possible for their members. Any excess is invested in other credit unions or in Federal Home Loan Bank. The Board of Directors, all members, decide precisely where to invest the excess.
What does it mean for credit unions to invest in each other? I’d like to understand that better.
Today’s task is to call various banks (Banknorth, Wainwright, Franklin First, Santa Cruz Community Credit Union.) I’m asking them:
“I want to open an account, and I’m researching various banks/ credit unions. Can you tell me where the bank deposits are invested? What percent of the bank assets are given out as loans, and what percent are invested? Who decides where to invest the money?”
First, Wainwright: 1-888-428-BANK
The automated voice speaks Spanish and then English during the opening message. Plus, some salsa-ish music while you wait.
I was transferred to George’s office –George is in charge of investment relations.
George’s assistant answered my question about who decides where the bank should invest: the decisions are made by the president, chairman, chief financial officer, and George who does investment relations.
The assistant on the phone didn’t know where the money was invested or what percent of the total investments/ loans was to cool non-profits (they list a ton on their website…) but she suggested that I suggested I look at annual report, and the 10Q, both on their website. She is sending me a bunch of info, too.
Second, Franklin First Credit Union: 413-774-6700
The person who answered the phone said, “Martha, the CEO can answer that. She’s at a meeting.” I was able to leave a message on the CEO’s voicemail. I mentioned in my message that I recently met with one of the Board members. I also said I’d try her back if I didn’t hear from her.
The CEO Martha called me back a few hours after I left my message! I love that. She said that Franklin First invests in other credit unions and banks. They aren’t allowed to invest in mutual funds. She said they don’t have time to research where the other credit unions or banks invest their money…She invited me to call her back.
Me: Of the amount that is invested by the credit union, what % in credit unions, what % in banks?
Martha: A small percent is invested in other credit unions; the majority in banks. (She added something about credit unions not having rates listed…I should ask her about this again.)
Me: I assume in banks it goes into CD…
Martha: In both credit unions and in banks it goes into CD’s.
Me: You have to keep same fractional reserve as banks?
Martha: She wasn’t certain if it was the same…but they do have a fractional reserve requirement.
Me: Why do credit unions have tax-exempt status?
Martha: Credit unions formed at a time when [lower-income] people got money from loan sharks. To avoid the usury rates of the loan sharks, the people formed coops. The government felt it was the right thing to make these coops tax exempt since the credit unions were people helping themselves…
She recommended I look at the Massachusetts League of Credit Unions website.
Third, Banknorth, the Northampton branch.
The woman who answered said something about the Banknorth investment group making the bank’s investing decisions. And then she said he is based in her branch. And I said, “The investment group is a man? He is based there?” She said, “Actually he’s the western region rep; he comes to this office every once in a while.” She was a little unclear. Turns out he’s based in Pittsfield. His name is S. Morantz. 413 748 8278
I feel a little nervous calling him –funny, how easily I feel intimidated by a big bank. I noticed I worried he’d be angry with me, try to demean me for asking these questions. I didn’t have this feeling calling the other places.
Steve called me back a few hours later, too. Amazing. He was just as gruff and demeaning as I expected. And, as I suspected the woman who gave me his number misunderstood my question. Steve is trained as a broker and helps people invest their own money. He doesn’t help the bank invest its assets. Clearly, not many people call to ask where the bank invests its assets.
He didn’t know the answers to my questions but managed to avoid ever actually saying he didn’t know.
I asked where the Banknorth assets were invested. He said, “Restrictions are heavy. It’s not like Banknorth invests in Google.”
He said the bank tries to lend money to people. There are federal rules about needing to lend to low income people and to small businesses, and Steve thought Banknorth was chartered as a community bank. He said the bank sells its mortgages to other banks or mortgage companies. He kept saying there are rules. The bank most of all wants your money in checking so that it doesn’t have to pay interest. (Oy, that’s where my money is now at Banknorth. They do invest the checking account money. A while back, I had convinced myself that if I kept it in checking where I get no interest, they weren’t actually investing it and thus I was less complicit in a system I didn’t understand.) I asked if he had a guess about what percentage of the bank assets go towards lending, what percent towards investment. He said they try to lend, but I don’t think he knew.
I asked, “Who makes the investment decisions for the bank?” He said, “There is an investment committee. There’s not a lot of latitude given the investment regulations which are there so banks don’t speculate.”
Drawing on my Smithy research, I said, “I thought there weren’t that many regulations. I was actually wondering if banks did speculate on international currencies…”
Steve: “Well, speculating means lots of things. It’s different from hedging. Hedging is not speculation.” [So banks hedge?]
That’s the gist of what I learned from him.
He had asked why I wanted to know this. I said I was looking to open an account and wanted to be in the most ethical bank I could find. He said something sarcastic like good luck, it’s not an ethical system. But he also sincerely added that credit unions or small community banks would keep money local, though they would have fewer services.
Fourth, Santa Cruz Community Development Bank 831-425-7708
I love this place. They are a CDCU –I asked the man who answered the phone how being a CDCU is different from being a regular CU. He said the CDCI focuses on community development. Though other credit unions give business loans (and not all do, actually –Franklin First doesn’t) the Santa Cruz Community Credit Union has special loans and does outreach to low income and other underserved people. They are a nonprofit committed to social and economic justice.
This man put me on hold and asked the Director of Finance my questions. He came back on the line and said they try to make as many loans as possible for their members. Any excess is invested in other credit unions or in Federal Home Loan Bank. The Board of Directors, all members, decide precisely where to invest the excess.
What does it mean for credit unions to invest in each other? I’d like to understand that better.
posted by oat collective at 12:00 PM
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