The Age of the Bankster

Remember Mr. Potter, the banker in “It’s a Wonderful Life”? He wasn’t exactly a paragon. In fact, it wouldn’t surprise me to learn that his character reflected how people of that era viewed their local banks and bankers.

Potter-like or not, however, bankers used to live in their communities and tended to have a pretty accurate picture of their needs, not to mention the credit-worthiness of the merchants and working folks who made up those communities.  (I grew up in a small Indiana town, and remember our local bank president with some affection; if I was overdrawn, he’d just call my father, who would transfer some money into my account. No embarrassing surprises, no fees. Just a parental lecture.)

So this report is troubling.

Here’s a statistic that ought to alarm anyone interested in rebuilding local economies and redirecting the flow of capital away from Wall Street and toward more productive ends: Over the last seven years, one of every four community banks has disappeared. We have 1,971 fewer of these small, local financial institutions today than at the beginning of 2008. Some 500 failed outright, with the Federal Deposit Insurance Corporation (FDIC) stepping in to pay their depositors. Most of the rest were acquired and absorbed into bigger banks….

In 1995, megabanks—giant banks with more than $100 billion in assets (in 2010 dollars)—controlled 17 percent of all banking assets.

By 2005, their share had reached 41 percent. Today, it is a staggering 59 percent. Meanwhile, the share of the market held by community banks and credit unions—local institutions with less than $1 billion in assets—plummeted from 27 percent to 11 percent. You can watch this transformation unfold in our 90-second video, which shows how four massive banks—Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo—have come to dominate the sector, each growing larger than all of the nation’s community banks put together.

Whatever one’s opinion of the bank shenanigans that precipitated the Great Recession, of “too big to fail,” or Dodd-Frank–whether or not you agree with Elizabeth Warren about the need for additional financial regulation–concentrations of power of this magnitude are cause for concern.

When that power is concentrated in large national banks removed from community relationships and concerns, the result is more foreclosures and fewer small business loans.

But perhaps the most important reason to treat the decline of community banks as a national crisis is that, while megabanks devote much of their capacity to activities that enrich their own bottom line, very often at the expense of the broader economy, local banks are doing the real work of financing businesses and other productive investments that create jobs and improve our well-being….

 While credit unions and small and mid-sized banks account for only 24 percent of all banking assets, they supply 60 percent of lending for small businesses.

The inverse is true of megabanks: they control 59 percent of the industry’s asset, but provide only 23 percent of small business loans. Given how much ground these giant banks have gained over local banks in the last seven years, it’s not hard to understand why small business lending has continued to shrink even as the economy has recovered.

Sometimes, bigger is better. Sometimes, it most definitely is not.

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“Urban” Family Dysfunction and Red Christian America

In the wake of the protests in Ferguson and Baltimore, there has been a lot more finger-pointing than sound analysis, with progressives accusing police of systemic disregard for the lives of black citizens and conservatives blaming “urban” (aka black) family dysfunction for a culture of lawlessness to which police justifiably respond. (If people don’t break the law, the meme goes, they have nothing to fear from the police.)

As with all gross generalizations, both of these broad-brush descriptions are wrong. Worse, to the extent they become common wisdom, they get in the way of our ability to solve real problems.

Are some police officers racists? Sure. But most aren’t–most are trying to do difficult jobs in situations that are often dangerous. That said, many more–especially but not exclusively in smaller communities– have been inadequately trained or badly managed, and those are issues that we can and should address.

The stereotype about black families has long been a staple of apologists for official misbehavior. It undoubtedly fits some urban families. But ironically, recent research suggests that the stereotype is much more likely to  apply to white families in deep-red, rural America. As Thomas Edsall recently reported

In the fall of 1969, Merle Haggard topped the Billboard country charts for four weeks with “Okie from Muskogee,” the song that quickly became the anthem of red America, even before we called it that.

“We don’t smoke marijuana in Muskogee, we don’t take our trips on LSD, we don’t burn our draft cards down on Main Street, we like livin’ right and bein’ free,” Haggard declared. “We don’t make a party out of lovin’, we like holdin’ hands and pitchin’ woo.”

Times have changed.

Today Muskogee, Okla., a city of 38,863, has nine drug treatment centers and a court specifically devoted to drug offenders. A search for “methamphetamine arrest” on the website of the Muskogee Phoenix, the local newspaper, produces 316 hits.

In 2013 just under two-thirds of the births in the city of Muskogee, 62.6 percent, were to unwed mothers, including 48.3 percent of the births to white mothers. The teenage birthrate in Oklahoma was 47.3 per 1,000; in Muskogee, it’s 59.2, almost twice the national rate, which is 29.7.

Maps of social dysfunction–out-of-wedlock births, drug use, domestic violence, divorce, etc.–show these behaviors largely concentrated in Southern, bible-belt states. Similarly, a recent study by the Centers for Disease Control soundly rebutted the widely-held stereotype of the absent black father; the CDC found that black dads are, if anything, more likely to be involved with their children than fathers in other racial categories.

The problem with stereotypes–of police, of urban dwellers, of racial groups–is that they prevent us from seeing individuals and situations as they are. Pat answers and dismissive characterizations don’t solve problems–they perpetuate them.

Update: If you are interested in getting the most from data from the Census website, this guide may help.

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If We Were Starting Over….

Every couple of years, I include a favorite question on the take-home final I give my graduate students. It’s probably time to retire it, but before I do, I’m curious to see how my blog community might answer it.

Earth has been destroyed in World War III. You and a few thousand others—representing a cross-section of Earth’s races, cultures and religions—are the only survivors. You have escaped to an earthlike planet, and are preparing to create a government for the society you hope to establish. You want to establish a new system that will be stable and enduring, but also flexible enough to meet unforeseen challenges. You also want to avoid the errors of the Earth governments that preceded you. Your answer should include the choices you make and the reasons for those choices, including: The type/structure of government you would create; the powers it will have; the limits on those powers, and methods for ensuring that those limits are respected; how government officials and policies will be chosen; and the fundamental social and political values you intend to inculcate and protect.

Most students respond by creating a system similar to the American model, with “tweaks”–usually things like universal health care or a constitutional amendment to the effect that money doesn’t equal speech. But on occasion, I’ll get a truly creative response–sometimes radically libertarian, sometimes communitarian/socialist.

The little community that has emerged in the comment section to this blog is demonstrably thoughtful and knowledgable. I’d be very interested in your responses to this “thought experiment.”

If humanity was starting over, and you were the one who got to make the decisions, what decisions would you make? What would a just and effective government look like in your brave new world?

Go!

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Arguing Responsibly

In Sunday’s Indianapolis Star, John Guy took critics of the proposed justice center (of whom I am one) to task. His arguments boiled down to three: a new Justice Center is badly needed; it has been studied for a long time; and critics have not offered alternatives to the proposal.

None of the critics, to the best of my knowledge, have debated the need for a new facility. And it is true that moving the jail and criminal courts has been studied (or at least discussed) since the early 1990’s, although those studies have been limited in one way or another. So that leaves us with the charge–implicit, but unmistakable–that criticisms that do not offer detailed alternative proposals should be ignored.

Let me say up front that I am very sympathetic to Guy’s impatience with nay-sayers, with knee-jerk opposition to proposals advanced by government voiced by people who have no constructive suggestions to offer. That said, however, it is equally unreasonable to dismiss very specific concerns raised by a wide variety of citizens without specifically addressing or rebutting those concerns.

My own criticisms have included the lack of transparency in the planning process, and the current back-and-forth illuminates why such transparency is important: had the City-County Council and the public been included earlier in the process, rather than being presented with a “take it or leave it” package, concerns could have been aired then and–if good answers were available–rebutted. This is particularly true of the financing mechanism, which the administration acknowledges has rarely been used in this sort of project, but it also applies to issues raised by architects, city planners and real estate brokers. If the city has hard data to support its contentions that the project as envisioned will not adversely affect a downtown market that five administrations have spent 30 plus years developing, that data should be shared.

Criminal justice experts have pointed out that systemic reforms currently being discussed in Congress (for which, amazingly enough, there is bipartisan support) would likely require changes in the size and function of parts of the planned facility. An open process would allow the city and/or the successful bidder to explain whether such policy changes could be accommodated, and if so, how.

I understand impatience (indeed, I tend to share it), but when you are spending huge sums and making decisions that will have an enormous impact on the city–decisions that we will have to live with for decades to come–getting it right is more important than getting it done quickly.

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Lone Star Lunatics

Okay–I really wanted to ignore this whole thing.

I mean, what can you say about people who are freaked out because the Department of Defense is mounting  a  military training exercise (with the admittedly bizarre name Operation Jade Helm)–because they think it’s all a plot to declare martial law and “take over” Texas?

Obama’s bringing in the U.N. or ISIS (depending on which loony you believe), and will round up Texans and put them in camps which are (inexplicably) located in abandoned Walmarts that are connected by underground tunnels that were somehow constructed without anyone noticing (and without, evidently, generating any large deposits of dirt to attract anyone’s attention).

And aliens have landed in Lubbock and are having sex with antelopes….

I suppose I should be over letting weird stuff that happens in Texas surprise me. After all, Texans keep electing Louis Gohmert, and the Texas legislature recently passed a bill to
“protect” churches from having to officiate at gay weddings, communicating to one and all that none of them had ever read the First Amendment, which already does that.

And it’s not even like Texas lunacy is new. I still remember Molly Ivins’ explanation of how members of the Texas “lege” had handled reports  that more Texans died annually from gunshots than on state highways. They raised the speed limit.

Still.

It’s bad enough when paranoia grips ordinary Texans (I started to say “ordinary citizens,” but ordinary, sane folks evidently live elsewhere. Like Utah, for example, where the menacing Jade Helm is also taking place, and everyone’s ignoring it), but Governor Greg Abbott has called up the Texas Guard (a group of interesting folks who probably shouldn’t be armed and shouldn’t be confused with the National Guard) to ensure that Obama won’t impose martial law. Then reliable nut job Ted Cruz promised to “look into it.” Because, if there were some plot, DOD would surely share that information with Ted Cruz if he asked nicely.

The utter insanity of all this boggles the mind.

News flash, Texas! You’ve already been assimilated by the Borg…er, U.S. (though I personally would like to reconsider the decision to make you a state–I wonder if Mexico would take you back?), so we have no reason to “conquer” you. And if for some reason the Army did roll in, do you really think your ragtag Guard could stop tanks and missiles?

I’d ask what you could possibly be thinking, if I thought you could think.

On the Daily Show, Jon Stewart noted that similar military exercises seven or eight years ago had generated absolutely no reaction, saying “I wonder what’s different?”

A picture of President Obama flashed on the screen, and he said “Ah, yes.”

Racism explains a lot of crazy.

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