Your Bank Account Probably Supports Cluster Bombs and Big Coal

By Stan Cox, AlterNet. Posted March 23, 2007.

What if you had a solid, reliable business partner who, you discovered, had been investing in cluster bombs, or coal and nuclear power plants, or destruction of tropical ecosystems, or loan-sharking or strip-mining?

You just might be in such a relationship if you're one of those 4 out of 5 Americans who have a bank account. Each time you deposit your paycheck, you build a relationship with a corporation that, going by the odds, is likely to be involved in all sorts of unsavory pursuits.

Short of stowing cash in your socks drawer, is there a way to keep your hard-earned money out of trouble? Maybe, but to do that while still taking advantage of the interest, federal deposit insurance, and many conveniences afforded by checking and savings accounts is not a simple matter. By closing an account or two, you can get away from Big Banking and its high-profile abuses, but finding a place to open a new, clean-and-green account is not that easy.

You don't have to be a Wall Street tycoon to play a hand in global ruin and local plunder. A modest checking or savings account at a major bank can get you in on some pretty ugly activities. Before trying to find a new, innocent home for your paycheck or tax refund, we'll take a look at what your current business partner may have been up to.

Big banks behaving badly

America's largest banks take in colossal sums of money every day, and they have before them a world of profitable opportunities in which to invest that wealth. Commercial banks and savings institutions have taken full advantage, chalking up a sixth straight year of record profits in 2006. But follow those profits to some of their sources, and the view is not so pleasant:

-- According to a 2007 report by the Belgian nonprofit Netwerk Vlaanderen, international banking groups led by Citigroup, JPMorgan Chase, Wachovia and Bank of America (America's four biggest banks) supplied lines of credit totaling more than $8 billion between 2004 and 2006 to companies involved in production of cluster bombs -- probably the most vicious form of non-nuclear weaponry. The banks' customers included GenCorp, Raytheon, Lockheed-Martin, Textron, Thales and EADS.

-- In February, Texas electric utility TXU became the target of history's largest-ever leveraged buyout, which had crucial backing by banking powerhouses JPMorgan Chase, Citgroup and Morgan Stanley. Intense pressure from environmental groups convinced the banks and buyers to announce that they would reduce the number of new coal-fired plants planned by TXU from eleven to three. Their eco-consciousness, however, was short-lived; they announced in mid-March that if the deal goes through, TXU will contract with Mitsubishi to build two nuclear plants near Dallas and build three additional nukes by 2020!

-- Wells Fargo & Co., with more than 3,200 bank branches in 23 states, has provided hundreds of millions in loans to Alpha Natural Resources. Alpha strip-mines coal in the Appalachians, favoring the extreme technique known as "mountaintop removal". Wells Fargo is heavily invested in oil and gas in the western United States, it has funded Burlington Resources' oil exploration on indigenous lands in the Amazon of Peru and Ecuador, and it funded a report supporting logging in Alaska's Tongass National Forest. Oh, and Wells Fargo was also named one of the country's "100 Best Corporate Citizens for 2007" by Business Ethics magazine.

-- A predatory feature of life in low-income America, the "payday loan" industry has ballooned by more than tenfold since 1993. The Tennessean in Nashville fingered four of the nation's top ten banks -- Bank of America, JPMorgan Chase, Wachovia and Wells Fargo -- as having played a crucial role in the rise of payday-loan shops, which saddle their customers (who average $25,000 in income) with interest rates reaching 200 percent, 300 percent, or even 500 percent on an annualized basis. Amazingly, such rates are legally recognized. The state of California, for example, limits interest on payday loans to 459 percent annually!

Who's in your wallet?

If you'd rather not endorse such shenanigans each time you endorse a check, it's not too difficult to stay away from predatory megabanks. In most cities and towns, there are plenty other places to take your money. But even if a financial institution's not on the list of America's largest banks, it still may not be the kind of business associate you'd like to have. Listed more or less in order of increasing "virtue," here are some ways that have been suggested to find a better home for your money:

See more stories tagged with: banking, environment, polluters, investing, socially responsible

Stan Cox is a plant breeder and writer in Salina, Kan.

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