Post-Peak Finance for Vulnerable Neighborhoods

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I am pleased to present another interview this week. The themes of today's interview are banking and local neighborhoods during a time of economic contraction. This week's guests are Scott Bossom, Vice President/Credit Administrator for Albina Bank (Martin Luther King branch) and Teri L. Karren-Keith, Vice President/Branch Manager, Albina Bank (Martin Luther King branch). They both graciously gave me an hour of their time for today's talk. Albina Community Bank is a locally-owned bank in Portland with a reputation for strongly supporting the local community, and especially minority neighborhoods.

In arranging for this interview, I sent Mr. Bossom a note in which I outlined my questions thus:

“I have three general areas of interest. First, there's the subject of the general future of finance in an age of economic contraction caused by the depletion of natural resources. Others have written on this topic (for instance, there's Gail Tverberg's work at http://www.ourfiniteworld.com/finite_world_issues.html and http://gailtheactuary.wordpress.com/2007/04/22/our-world-is-finite-is-this-a-problem/), but I'd like to know how banks view this issue.

“Second, there's the subject of how economic contraction affects local communities. Specifically, what barriers are now appearing in front of people who want to finance projects? Especially, what existing hindrances faced by vulnerable communities are now being amplified by economic situation? How have big banks contributed to making vulnerable communities even more vulnerable?

“Third, what can local communities – especially working-class and poor communities – do now to finance necessary projects? How is Albina Bank helping these communities? And have locally-owned banks experimented with emerging approaches like establishing local currencies and microloans for small-scale businesses?”

These questions laid the groundwork for our discussion. During the interview, we talked about the current local economic picture, and whether that picture actually lines up with government and mainstream media reports of economic “recovery.” Scott and Teri told me of the weaknesses in the commercial real estate market, and the impact of resource shortages on the decisions of local banks. Terry voiced the opinion that our present crisis will not suddenly go away.

I asked point-blank, “What have big banks done to destabilize local neighborhoods?”, and we talked about the impact of predatory and discriminatory lending practices by big banks such as Bank of America and Wells Fargo. (For more on this subject, and on discriminatory pushing of subprime mortgages on minorities, see “Wells Fargo, Ghetto Loans, and 'Mud People',” “Race Discrimination Lawsuit Filed Against Bank of America, N.A.,” “Countrywide Sued For Discriminating Against Black And Latino Mortgage Buyers” and “Study Finds Disparities in Mortgages by Race”.) And we discussed the Fox News reports from several months ago, which blamed minorities and Federal anti-discrimination laws for the subprime crisis of 2008. Scott and Teri were genuinely surprised by this sort of reporting (both stated that they do not watch Fox), and wondered how Fox managed to create such a story.

(On a completely unrelated subject, it seems that Fox and spokespeople like Sarah Palin are now blaming the Deepwater Horizon disaster and Gulf oil spill on environmentalists and left-leaning members of the Federal government. In both the subprime case and the case of offshore oil drilling, the right-wing message is the same: “Oh, here, look at this mess that we've made. Only, it's not our fault! The mess has actually been caused by people trying to pass some semblance of laws designed to keep us from making a mess!” If lying made people rich...but then again, these people are rich.)

Regarding subprime loans, we discussed the fact that lenders deliberately presented a picture to potential borrowers that was not clear or full. Scott tied this in to credit card policies that are also deliberately made unclear, in order to insure that borrowers are liable to be penalized.

We talked about what vulnerable communities can do to become resilient and self-sufficient. Teri stressed the value of localism and supporting local businesses. Scott mentioned microloans and organizations such as Mercy Corps who provide guidance to small businesses. Both Scott and Teri agreed that there is a swell of interest in entrepreneurship and starting one's own business among people in the Portland metro area. I mentioned the rise of local currencies, which seems to be a new concept to those who are involved in traditional banking.

Lastly, we tried peering into the future of banking in an age of general economic contraction and collapse, and Scott and Teri shared their perspectives of what such a future might look like. Teri returned to a simple prescription for the survival of local banks in such a time: to focus on community relationships and actions that build trust.

A podcast of the interview can be downloaded from the Internet Archive at this address: Post-Peak Finance For Vulnerable Neighborhoods.