Sunday, January 17, 2010

Abandoning the Creeping Meatball

Having little to risk, and still less to be grateful for at their hands, I recently began the process of transferring my banking from a large, interstate, TARP-gobbling megabank into a small community bank.

When the housing market first began to go into the tank, 18 months or so ago, I happened to be in Farmington, Maine, the same town as a fellow who sits on a national board of bankers that advises the Fed. He was a good source to interview as Fannie Mae and Freddie Mac began to fall into chaos, but he really had very little doom-and-gloom to talk about for the local Maine banks. They had not behaved foolishly and had not exposed themselves to extraordinary risks with subprime loans and the like.

"We lend money to people who will be able to pay it back," he said, and it seemed like a good policy to this old business writer.

It was not just his bank that stayed aloof from the more speculative mortgage ventures, but the bulk of small community banks. A year later, when TARP funds were being distributed, I was in New Hampshire and did an article on that. Of four local banks, only one had requested TARP funds and they had apparently done so to make sure they could get them if they needed them; they almost immediately assessed the situation and turned them down as unnecessary. Again, a lack of speculation on their part had left them on relatively solid financial footing.

Of course, we're all subject to the effects of the overall collapse, but I've seen minimal impact on community banks. Is that a reason to transfer your money to them? Not really. We're all protected by FDIC, and you're not anymore likely to lose your life savings at one bank than another.

There is an issue of passing the whiff test and of whom you choose to do business with, however, and after viewing a few documentaries on the financial collapse, I decided I'd rather not be in bed with the people who had not only created the subprime mortgage debacle but whose credit card policies were geared to exploiting the lower middle class.

I like to choose with whom I do business. I also went years without eating table grapes and I stopped drinking Coors before I had developed a more sophisticated taste in beer anyway. My reasons aren't as good as the Rotarian who, during a discussion of foreign automobiles, remarked, "I don't buy Japanese cars. They used to shoot at my airplane." But they're good enough for me.

I will admit, however, that, just as nearly any beer made is better tasting than Coors, there are benefits to dealing with community banks that go beyond the warm glow of having abandoned the creeping meatball of heartless capitalism.

For instance, I maintain two bank accounts at Bangor Savings, more than a year after leaving Maine. Why? A big reason is that I can use a Bangor Savings Bank card in any ATM in the country and never pay a fee. Okay, I sometimes pay the fee. But it is instantly credited back to me by my bank. This negates the disadvantage of working with a community bank -- not having a branch available when you're out of town.

But I do have to deposit checks, and it's a pain to mail them to Maine. So a few days ago, I opened an account at Mascoma Savings Bank here in town. It was a Thursday morning, which I mention because I walked out with the little folder of starter checks, but, the following Tuesday, I received my debit card in the mail. And then my printed checks arrived on Saturday, nine days after I opened the account.

In the same mail was a hand-written note from the customer service rep who had dealt with me when I opened the account, thanking me for my business.

As I see it, I'm making a statement, and, in so doing, I'm also getting to work with efficient, responsive, personal bankers who appreciate my business. Oh, and I'll apparently be able to move money back and forth between New Hampshire and Maine easily because Mascoma Savings offers free online bill paying. The larger banks charge fees for that.

It's a little hard to find the downside to all this.


Ronnie said...

And your customer service representative has excellent handwriting - always key in my book. I expect she can write numbers just as legibly.

Incidentally, I still have stock in our old local bank altho no funds anymore. They have always paid a nice dividend.

Ronnie said...

Just one quibble: I do regret the modern practice of starting off with just your name instead of the ancient practice of writing "Dear..." I wonder if they are afraid of starting an unwanted relationship, and yet, there is your bare first name and no honorific or anything. So why not go the whole way and call you "dear?" This new practice seems a bit peremptory, calling you to attention!

Brian Fies said...

I've wanted to do the same for a long time but haven't. Partly because I've been pretty happy with the service from my multinational megabank, including the delight of discovering my ATM card would work in Florence, Italy one day when I really wanted a gelato. But I love the idea of supporting the hometown bank--just as Karen and I are increasingly trying to throw as much business as we can to Mom & Pops--and may actually look into it this time.

Nostalgic for the Pleistocene said...

I love our little community bank for these same reasons. And it does offer some options, like letting me choose between the bank's debit card or a Visa debit that i can use as a Visa, supposedly anywhere in the world. I expect i could use it in Italy. It works on Long Island just fine.

Anonymous said...

For anybody interested in the origins of "creeping meatball":

Creeping Meatballism

Good post, Mike.

- Ted Kerin

Mike said...

That's quite a flash, Ted -- I've probably got a reprint of that article somewhere. I had forgotten it, however, and was referencing the motto of the Yippies ... most of whom no doubt read MAD Magazine as high school students.