In this time of political stridency, where everything is either red or blue, Boston City Councilors have found a potential purple issue that everyone can stand behind, be they radical lefties or Fox News worshippers. The city pols even have a surefire slogan to reel in widespread support: "Invest Boston money in banks that invest in Boston."
"No one can deny that," says Councilor-At-Large Felix G. Arroyo, who, along with Councilor-At-Large Stephen Murphy, is drafting "community reinvestment agreement" legislation. "If your bank doesn't lend to people here, then they shouldn't be able to make money off of our money."
Along with community activists from groups including Jobs With Justice, councilors recently introduced their ideas at a rally inside City Hall. Though specifics have not yet been hammered out, the action is intended to ensure that Boston's "significant resources" are invested in banks that "fund small businesses, foreclosure-prevention programs, private ventures, home-ownership opportunities, and other programs and investments that foster economic growth in the city of Boston." According to the Wisconsin-based Center for State Innovation, the transfer of funds from "out-of-state multinational mega banks" to "smaller in-state banks" could create and retain approximately 4500 small-business jobs in Massachusetts.
Theirs is not a pie-chart-in-the-sky proposal, as there are recent precedents right here in the commonwealth. This past April, current state treasurer and independent gubernatorial candidate Tim Cahill transferred more than $230 million in state funds out of Bank of America. The withdrawal, which was the result of that institution's refusal to cap credit-card interest rates for Massachusetts customers at 18 percent (as state and local banks must do), also hit Citigroup and Wells Fargo, which collectively lost $12 million in accounts.
States and cities nationwide are also enacting similar measures to punish ostensibly abusive banks (and to reward local-minded institutions). There is overwhelming support in the New Mexico legislature, for example, for a bill that would divert billions to small banks, and such metropolises as Los Angeles are using city investments as leverage to change what some consider predatory interest rates. Even billionaire New York City mayor Mike Bloomberg has claimed a willingness to move city tax revenue to credit unions.
In an e-mail, Bank of America spokesperson T.J. Crawford emphasizes the $1.96 billion that his company invested in Boston's "underserved communities" in 2009, as well as $12 million in contributions made to Massachusetts charities that same year. But impressive as such philanthropy may be, it hasn't been enough to stop the charge.
"I'm not a fan of these big banks — they don't play fair," says Murphy, who blasted such financial institutions as Goldman Sachs while touting his own candidacy for state treasurer. Adds executive secretary-treasurer of the Great Boston Labor Council Rich Rogers: "It's a casino economy with [the big banks]. Heads they win, tails you lose."