Build Something Beautiful Newsletter
Q1 | 2016
Written by Tom Steyer, Chairman of Beneficial State Bank Board and Kat Taylor and Dan Skaff, Co-CEOs
Some looking-back design is going on in banking circles. While we embrace our regulatory obligations, we also applaud the critique. We can always improve how we manage the most important source of finance to Main Street. In the early days of Dodd Frank, the attempt to re-regulate the banks in the wake of the financial crisis, we at Beneficial State Bank had proposed a simpler regime to make sure all banks serve their constituencies. This is no mean feat. Those constituencies include their customers, the communities they serve, the American economy, the FDIC fund and therefore the American taxpayers, and society at large. As the original and most powerful form of crowd-funding, banks should be financing the world in which we all want to live and protecting our pooled funds so that they are available for both the transactional and borrowing needs of those who provide them, the depositors.
Here are four rules that we thought back then would respect them all.
1. Don't allow any bank to grow larger than a set amount of assets -- pick your number but it can't be followed by "trillion” and any bank up to that size should not threaten the economy if it teeters or even fails. And any bank approaching the limit should have a living will to break it up into pieces each of which once again complies.
2. Don't allow banks to engage in risky investment activities including trading securities. Banks used to be precluded from that by first the Glass Steagall Act and then potentially by the Volcker Rule. Certain investment activities are just inconsistent with the obligation to ensure that the FDIC fund protecting all accounts up to $250,000 remains capable of insuring those funds and solvent. Remember, the government and therefore we citizens are really the backstop to the FDIC.
3. Insist that all banks keep a capital ratio of at least 10% serving as a strong buffer against unforeseen economic shocks or declines in asset quality. This level of buffer is prudent and justifiable given how much of the main economy and American's prosperity is still riding on the safety and soundness of the banks.
4. Let them fail. Do not bail another bank out. The certainty of loss will force bank shareholders to shoulder the risk they signed on for, and limit it if they see it as excessive to their expected investment return. A lot of the pain of the Great Recession could and would have been avoided if bank shareholders had fully expected the losses to land entirely on them instead of on the government, taxpayers, homeowners caught in the resulting housing slide, and citizens trying to make a decent living.
Given behavior since the adoption of Dodd Frank, we at Beneficial State would now add a fifth rule of the road.
5. Given that the biggest banks have paid $235 BILLION in fines associated with abuse of bank customers just since 2008, at a certain level of violations, the license to engage in these business lines ought to be withdrawn or at least suspended. At present, even high fines are just seen as a cost of doing business, and a very lucrative one at that. Nothing short of license revocation is likely to reform the predatory practices we have seen to date.
Nothing is simple. Nothing is easy. But five rules can help keep our eye on the prize of a safe, sound, fair, and value-creating banking system. Now that would be changing the banking system for good.
Written by Andrea Walker, Creative Media Evangelista
Last month, Beneficial State Bank announced plans to purchase Pan American Bank in 2016. Upon merging, the combined entity will operate as Beneficial State Bank and Pan American’s current Chief Executive Officer Robert Hughes, will lead the Consumer Banking Unit. I grabbed coffee with Robert Hughes, and Dan Skaff, Beneficial State Co-CEO and President to share what the anticipated upcoming merger means for Pan American and Beneficial State clients and the communities they serve.
AW: Hi Robert, who does Pan American serve and why was this opportunity something Pan American decided to pursue?
RH: We provide banking products and services to individuals and small businesses, that help people get greater access to life’s necessities than their constrained credit would otherwise allow. Most of our customers are low to moderate income households and we are proud of our long history of service in low to moderate income communities. We strongly believe this partnership will strengthen our ability to continue our mission of providing mainstream banking services across our service area. For us at Pan American, we will be able to offer our products and services across more cities and more customers. For our customers, they will gain access to the innovative and mission focused products currently offered by Beneficial State Bank, in addition to our traditional consumer products.
AW: Thanks Robert! It sounds like our core values are closely aligned. Dan, what does this mean for Beneficial State? Does this dramatically impact Beneficial State’s asset size and footprint?
DS: Thanks Andrea! That’s a great insight. One of the reasons we decided to merge is because of how closely we are aligned. We are both community development financial institutions working to deliver fair and transparent banking products and services. Regarding asset size and footprint, our combined entity will have assets of approximately $580 million and deposits of approximately $465 million. The combined 12-branch network will serve the California communities of Oakland, Santa Rosa, Sacramento, Los Angeles, the Central Valley and additionally Portland, Oregon and Seattle, Washington. We look forward to providing banking products to Pan American’s community, such as commercial loans of up to $7 million, and bringing the products they expertly offer, such as auto loans, to our community.
AW: How exciting that both respective communities across California, Oregon and Washington will have access to more products and services delivered in a sustainable manner! Well, thank you both for taking the time to chat and I look forward to sharing more about our upcoming merger in our next publication.
Questions or thoughts? Feel free to reach out to me, Andrea Walker, Beneficial State Bank’s Creative Media Evangelista at email@example.com.
Written by Erin Kilmer Neel, Chief Impact Officer
Beneficial State Bank exists to work with changemakers to create a new economy, to empower our communities and make sure everything we do is a “benefit to all. harm to none.”
To ensure we are continuously working toward those goals, we measure and monitor all aspects of our business, from our loans, to employee practices and procurement policies. And as a triple bottom-line bank, we believe it’s important to be transparent about how are doing. To share how we are doing, we’ve launched an Impact Website.
“We at Beneficial State Bank and Foundation live to empower and reveal the remarkable work of our heroes -- our borrowers, depositors, and communities -- and this website marks a step toward that goal,” said Kat Taylor, Beneficial State Bank Co-CEO and Co-founder. “The Impact Website collects in one location reporting on our lending, the outcomes of that lending, our corporate practices, and our commitments toward a New Economy. We are honored to help bank customers co-create that New Economy as best we can -- an economy that is fully inclusive, racially and gender just, and environmentally restorative. Of course we can always do better in measurement but onward into ever better, data-driven metrics we go!”
On the site, we do our best to share with you our beliefs, our approaches, our data, and what this data means in context. We invite you to browse the site or jump in to specific sections to learn more about our Vision, Ownership, Lending, Consumer Products and Services, Corporate Practices, Movement Building and more.
Questions or thoughts? Reach out to me at firstname.lastname@example.org.
Written by Emma Guttman-Slater, Community Engagement Officer
We can hardly believe our signature event, the Oakland Indie Awards, is 10 years old! Every year, in Oakland, CA, we honor socially and environmentally responsible independent businesses and artists, and remind our community about the positive impact of supporting local commerce. Since its inception, the Oakland Indie Awards has awarded over 100 local businesses and artists for their contribution to Oakland's unique culture and prosperity, and through our community-driven nominations process, directly benefits over 220 businesses and artists each year. This year’s event will be at the Oakland Museum of California on May 12, 2016. Learn more about the Oakland Indie Awards here.
In Oregon and Washington, we also convene and highlight mission-driven small businesses by hosting Money on a Mission (MOAM), an event designed to connect them to mission-aligned capital. To stay updated about MOAM in Portland and Seattle, complete this form. If you are already subscribed, you will be sent a unique link to update your profile.
Questions or thoughts? Reach out to me at email@example.com.
Written by Andrea Walker, Creative Media Evangelista
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