If politicians don’t downsize banks and financial firms that are “too big to fail,” the American people could bring powers of their own into play that they haven’t yet exploited. Consumers in the U.S. haven’t come of age in their understanding of the counterweight they could pose to institutions that don’t serve their interests.
Even the biggest banks need deposits. Consumers can trim down the Washington Mutuals and Banks of America of the world anytime they please, simply by removing their money and putting in it a local bank which, like many state-chartered local banks in Massachusetts, hasn’t engaged in predatory lending and loans money locally. Or putting it into a credit union.
Then they could go on to look at the alternative economies that have played larger parts in the country’s history than many of us know they have. The free market hasn’t always been dominated by megacorporations. The U.S. has long been fertile ground for the invention of new, responsive financial institutions.
One example: Since the crash of 2007, a lot of people have taken a fresh look at the state bank that seems to have contributed to a prosperity in North Dakota that’s an anomaly in a time when many states are flailing frantically to avoid bankruptcy. The North Dakota Bank, not held by shareholders and not insured by the Federal Deposit Insurance Corporation, essentially uses the state’s capital to back loans for businesses in the state (the money is often actually advanced by private banks, but the state bank offers an incentive by guaranteeing the loans), student loans, farm disaster assistance, and loans for projects the state considers beneficial to its residents.
Closer to home, there’s another example of something that was quite common in the nineteenth century: alternative currencies.
In Berkshire County you can buy “BerkShares” to use locally and get what amounts to a 10 percent discount on everything you purchase with them, because the currency has been so successful since it went into circulation in 2006 that by now 90 BerkShares equal $100.
So you buy 100 BerkShares for $90 and that 100 BerkShares will buy you $100 worth of goods at a business that accepts them (caveat: some businesses require a payment split between BerkShares and dollars).
Five banks and 360 businesses accept BerkShares; soon the E.F. Schumacher Society, which started up the new currency, plans to go into a local lending program with it.
