Mega-banks: More than just Banks
One of Green America’s goals is to teach consumers how the businesses you choose to support can have a big impact on the world around you. From the food we buy each week, to the clothes we wear, to the energy we use to heat and power our homes – on almost all levels of the economy, we have a choice between companies that operate with an awareness of the effects of their presence on the world, and companies that pursue the goal of growth over anything else.
And while it is easy to see the negative impacts of massive agricultural engineering companies, clothing companies’ sweatshops in faraway countries, and dirty international oil companies, the financial services industry influences nearly every sector of the economy – often with serious implications for people and the planet. And as banks actually sell very few tangible products, it is more difficult to recognize that our choices can drastically affect our environment and our communities. To give an example, let us look at commodities: the raw materials for nearly every product you can buy.
Recent news coverage of the banking industry has revealed that large investment institutions like JP Morgan Chase and Goldman Sachs have been spending their money on warehouses. As in the large empty buildings where industrial materials, like aluminum and copper are kept before manufacturers buy them to produce goods. Why would a bank be interested in owning a warehouse?
There are a few reasons. When an entity like Goldman owns the rights to its warehouse, it can control the time it takes to process an order from a manufacturer for raw materials. While manufacturers wait for their orders, the banks make trades based on the projected future price of the materials in their warehouses. The catch is that the banks already know how much they have, where it is stored, and exactly when they plan on moving it. They use their knowledge of the location and inherent value of the commodities to make purchasers less “in-the-know” believe that the commodities are worth more. And as the owner of the facilities and the commodities inside, the banks are the ones who overwhelmingly profit from their position in an industry where they really do none of the work.
What is the result of a large investment bank purchasing industrial amounts of something like aluminum and then artificially charging more for it? Companies that use the metal, like Coca-Cola, pay more for the materials they need to make their soda cans, and then they pass this cost onto the consumers. So when you pay a few more cents for a can of coke at the vending machine, you are essentially supporting the monopoly created by the bank that purchased the warehouse in the first place.
So if banks are presently deregulated to the point where they can exert influence upon multiple levels of industry and profit across all of them, where does that leave us as consumers? It leaves us right where we started – with a choice. When we deposit our paychecks at, or use credit from a mega-bank, we are directly supporting activities like monopolistic commodities speculation that inhibit industrial efficiency and raise prices for consumers. And just like purchasing an organic apple, or fair-trade clothing, we can support local financial institutions that abstain from activities that come at a great cost to society. Green America’s Break Up With your MegaBank and Take Charge programs offer information and resources to help you make the switch from a megabank to a local institution that serves people and the planet. Check them out today!