By Jesse Urban in collaboration with Chuck McDougal and Becky Daggett
Longer Web version

As Starhawk (1987) suggests, “awareness is the beginning of all resistance.”  Every day I am becoming more aware of the role I can play in either  perpetuating or resisting corporate-led globalization, and the choices I make  regarding the support of specific corporations is a part of this. For instance, the destructive practices of Citibank exemplify the threat posed to the earth and its inhabitants by the unrestrained freedom to exploit, and the salaries garnered by corporate CEOs, as well as the interest rates charged by mainstream financial institutions, serve as indicators of a system which allows the rich to get richer and the poor to get poorer - a system which frankly, I’d like to resist. Amidst stories of corporate irresponsibility however, I have also found financial options which may be more in line with life-serving values and social justice - including for instance, local banking and lending circles. Investigating large corporations is not an easy task and the information in this article represents only a small start. Ideally, we will one day build a system in which the practices and values of businesses and leaders are common knowledge, and where both are responsible to the needs of the world’s peoples - as well as those of the earth. Sadly, this is not yet the case, but there are several organizations which offer information on corporate practices that allow us to investigate our choices more thoroughly. We do have choices when it comes to opening a bank account or signing up for credit cards, and our choices do indeed make a difference. While these choices alone may not provide the “end all be all” of progressive social revolution, it may offer us a step toward creating a more harmonious and just system. 

First, a couple of stories.... After signing up for classes for the first time at NAU, I came across three tables conveniently situated between the fieldhouse and the campus bookstore. On these tables sat credit card applications from Citibank, Dillards and Discover, and behind them sat their representatives with promises of sweet deals and financial rewards (this was nearly 10 years ago and to my knowledge this no longer occurs on campus). Being of tender age and naive mind, I signed up for - and was given - all three credit cards, despite the meager income I earned from my minimum wage, part-time job. Within about a year, two of the cards were maxxed-out and taken away from me. During the same time period, I also opened an account at what was First Interstate Bank, and after several incarnations, is now Wells Fargo. I made this choice for several reasons - my family banked there, the name was familiar, and frankly, I did not know about other options, nor their impact on our community. Wells Fargo also quickly established a credit line for me, which like my account with Citibank, was maxxed-out relatively soon thereafter, with school bills, textbooks and groceries. As an aside, according to the National Federation for Credit Counseling, the average household in the US owes $8,000 in credit debt.

These stories go beyond my age, naivete and supposed lack of budgeting skills. Had I known about some of the projects Citibank supports, I would like to think that my decision would have been different. As Rainforest Action Network or RAN (2001) argues “behind each destructive oil pipeline, rainforest clearcut, and displaced indigenous tribe lies a big bank willing to finance and profit from those projects.” Had I known about Citibank’s penchant for predatory lending, I would like to think I’d have been a bit more suspicious about its table on NAU campus and the ease with which Citibank issued me a credit line. Furthermore, had I been familiar with Thomas Greco’s work highlighting “debt slavery” and how corporations like Citibank and Wells Fargo reflect and support glaring disparities in wealth and power, my banking choice may have been different as well. Simply stated, I feel that it is up to me whether my financial choices - and my behavior in general - support the money paradigm, which revolves around profit and little else, or supports the life paradigm, which focuses on human rights, ecological responsibility, dignity, honesty and compassion.

A number of organizations have embarked on an impressive campaign aimed at exposing the destructive practices of Citigroup, which is one of the largest financial institutions in the world. There are many corporations that I could have highlighted in this article other than Citigroup. However, I have chosen Citigroup because of its popularity, the financial resources it commands, and because it has been recognized as one of the world’s most destructive banks. Citibank, (the consumer bank) Salomon Smith Barney, (the corporate investment bank) and Travelers Insurance are the primary corporations under the umbrella of Citigroup. Others include Smith Barney consulting partnership, various Smith Barney futures funds, a variety of venture partnerships, real estate and home mortgage firms as well as oil drilling and energy partnerships (See www.ResponsibleShopper.com for a complete list). Citibank was voted one of the “Top 10 Corporate Criminals of 1999” by Multinational Monitor (a journal whose writers track corporate behavior, particularly in the “Third World,” and its impact on workers’ rights, labor union activity and the environment). Citigroup received a “D” from the NAACP for its employment, community investment, advertising and charitable giving practices (Responsible Shopper 2001) and it has raised the ire of many activist organizations for its predatory lending practices (deceptive and discriminatory lending practices targeting low-income, elderly and minority homeowners). Furthermore, according to the AFL-CIO, Citigroup CEO and Chairman Sanford I. Weill, made over 2,000 times more in 1999 than the average production worker in the US (Responsible Shopper 2001).

Given its lack of meaningful social or environmental criteria for evaluating companies or projects, Citigroup (through Salomon Smith Barney) has underwritten bonds for the Three Gorges Dam project on China’s Yangtze River. Up to 1.9 million people are in the process of being forcibly relocated as a result of this project, and according to RAN (2001), the project will submerge 13 cities, 140 towns, 1,352 villages, 657 factories and almost 75,000 acres of farmland. The project also threatens already endangered species, including the baji or white dolphin, of which there may only be about 100 left in the world (RAN 2001). So essentially, my use of the Citibank credit card goes to support the Three Gorges Dam project. Activists are also focusing on Citigroup’s involvement in the destruction of Headwaters Forest, the destruction of Orangutan habitat in Indonesia, their involvement with the Chad/Cameroon pipeline, and much more. For more information on Citibank actions and many other campaigns, please visit Rainforest Action Network (www.ran.org), Student Alliance to Reform Corporations (www.corpreform.org/home.html), Responsible Shopper (www.responsibleshopper.com), Earth First! (www.earthfirstjournal.org) and Global Exchange (www.globalexchange.org). These organizations, along with Corp Watch (www.corpwatch.org), Co-op America (www.coopamerica.org) and Multinational Monitor (www.essential.org/monitor/monitor.html) will also help you investigate other corporations of concern.

Critics also highlight the role of the current economic system in perpetuating the gap between the rich and poor in the US, and between the so-called “First World” and “Third World.” According to the United Nations Food and Agriculture Organization in the year 2000, 826 million people globally did not get enough to eat and Anderson (2000) notes that 46 million Americans live below the poverty line - this is nearly 17% of the U.S. population. The richest 1 percent of the population holds 40 percent of the nation’s house-hold wealth and as Shawki and D’Amato (2000) explain, the “assets of the top three billionaires exceed the combined GNP of all the least-developed countries - with their combined population of 600 million people.” Clearly, these statistics indicate great disparities in wealth, but they also serve as indicators of an economic system geared toward increasing the financial wealth of only a few of the world’s citizens. As another indicator, the salaries for CEOs of some of the major US banks range anywhere from 420 to 2600 times more than those of average production workers in the US. For instance, the President and CEO of Wells Fargo, Richard Kovacevich, took home $12,323,132 in 1999 - which is 420 times more than the average US production worker’s salary that year. Despite this remarkable wealth, Wells Fargo was given a “D” for employment, community investment and charitable giving practices by the NAACP. The CEO of Bank One, John B. McCoy, made $17,011,797 in 1999, which is almost 600 times more than the average US production worker. NAACP gave Bank One a “C” for its employment, community investment, advertising, and charitable giving practices. As a final example, Bank of America CEO and Chairman, Hugh L. McColl Jr. made $76,013,442 in 1999... this is 2,600 times more than the average US production worker receives in salary. Bank of America however, received a “B” from the NAACP for its employment, community investment, advertising, and charitable giving practices. The salary figures above were provided by the AFL-CIO to Responsibleshopper.com and are available on the R.S. website along with the NAACP ratings. Keep in mind that these salary figures do not take into account exercised and unexercised stock options, which are also available on the Responsibleshopper.com website.

How do these exorbitant salaries help Flagstaff? Does the money I keep at Wells Fargo, or the interest rate payments I make on my loans and credit lines stay in Flagstaff or even Arizona? (My interest rates range from eight to eighteen percent, depending on the account). Generally speaking, bank fees cover administrative and other costs - excess money (profit) is sent to corporate headquarters (which are usually out of state) and is then distributed to mostly wealthy owners/stockholders of the institution. Because the profitability of the company helps to “justify” the salaries of bank CEOs, my payments essentially support the Wells Fargo CEO salary, which in turn, ultimately supports national and global inequalities in wealth and power. This is certainly not to say that these banks are inherently “evil” - they have in fact made generous contributions to local projects and do provide services that help local businesses and individuals. Rather, it is simply to say that problems exist and, “... as Gandhi reminded us, ‘the earth has enough for everyone’s needs, but not for some people’s greed’” (Shiva 2000).

Joining a credit union may be one of the most obvious alternatives to big chain banks. Credit Unions are structured as non-profit cooperatives, meaning that members own the credit union and the credit union exists because of - and for - it members. Briefly, the International Co-Operative Alliance defines a co-op as “an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise” and co-ops generally share and promote values of self-help, self-responsibility, democracy, equality, equity and solidarity. As Jaime Baxter at the Arizona State Credit Union explained, member/owners come first, not simply profit. In fact, as per the structure of cooperatives, all profit (money remaining after the bills are paid) is returned to member/owners - thus with respect to Arizona State Credit Union, profit is recirculated within Arizona. Arizona State Credit Union was organized in 1951 and provides personal (not commercial) banking services and low-cost loans. Its board members are volunteers and residents of Arizona, and this credit union boasts over 100,000 members from around the state. Its non-profit and cooperative structure in and of itself, provides an important alternative to mainstream banking choices. There are other credit union options in Flagstaff including Arizona Central Credit Union, Coconino Federal Credit Union, First Credit Union and Sun West Federal Credit Union, however I have not yet had the opportunity to visit them.

Local banking may be another option. First State Bank for instance, provides services for both individuals and businesses. As president of the bank Blake Rolley explained, First State Bank’s commitment is entirely to Flagstaff and Northern Arizona. The holding company that owns the bank is in Flagstaff and the profit made by First State Bank stays in Flagstaff; income according to Rolley, is retained by the bank and used to help it better serve the community. Loan decisions are made by a local committee & management team and over-all, they strive to be more hands-on, focus on creating one on one relationships with customers and strive to be more accountable and responsive to the community. And furthermore, how many of us could get an appointment with the president of Wells Fargo? Based on my experiences at both First State and the Arizona State Credit Union, it seems that building personal relationships are of great importance to both institutions, as representatives were willing to take the time to talk with me and answer my questions. Moreover, for non-profit and for-profit businesses looking to open checking accounts at a strictly local bank, First State is really the only option.

Following my discussion with Rolley, I decided to pop-in to some of the other banks downtown, with questions about their history, services and loan practices. I left the mainstream banks feeling rather annoyed with the responses I received. For instance, I asked the investment manager at one bank about the services they offered - she told me she had no time to speak with me and that their investment services “run the gamut.” When I asked for brochures about their investment options, I was told there were none. A representative from another bank showed me to the waiting area, but after about 15 to 20 minutes of waiting, I decided it was time to move on. Folks from another bank simply directed me to their website to find answers to my questions.

I also stopped in to Stockman’s and National Bank of Arizona, which were both pleasant experiences, as representatives at both banks took the time talk with me, answer my questions and provide me with brochures about their bank and its services. According to their literature, National Bank of Arizona began in Tucson as a community bank in 1984, and is now the fourth largest bank in Arizona. In 1994, it was acquired by Zions Bancorporation in Utah, although according to its literature, the bank focuses on providing services (individual and business) to folks in Arizona, particularly small business loans. Similarly Stockman’s Bank, according to its literature, began in Kingman in 1980 with the express purpose of providing folks “a new brand of banking” and thus, an alternative to big chain banks. Stockman’s has also grown throughout Arizona and into California, focusing on personal relationships, local decision making and serving the needs of its community. Each bank branch operates on the local level and is given decision making power (in making loans for instance) within the broad guidelines set by the administration. This, according to their literature, helps them better serve the particular needs of their community. Granted, all of the banks, “big chain” or not, emphasize in one way or another, building personal relationships and community involvement, but quite frankly, such statements carry more clout for me when they come from representatives of institutions rooted in the community, or at least the state. Similarly, all banks are required by law to adhere to the Community Reinvestment Act, which was created by Congress in 1977 to encourage banks to address the credit needs of the community in which they operate, including middle and low income neighborhoods. Thus, I often find it difficult to discern the difference between practices that are essentially window dressing and/or required by law, from those that truly reflect commitment to community. For me, just knowing that my money is being sent to corporate headquarters in another state, that the profit made from my time and labor is being paid out to “unemployed” stockholders and is serving to justify multi-million dollar CEO salaries, is enough to make me wonder how much good it’s doing our community to keep my money at a chain bank.

While perhaps not perfect solutions, local banks and credit unions may allow folks a step towards finding financial paths more in line with their core values. However, it would be nice, for instance, if local banks and credit unions vigorously supported or even acknowledged the community currency program, Flagstaff Neighborly Notes. Furthermore, local banks and credit unions do not necessarily challenge what economist Thomas Greco (1990, 1997) refers to as debt slavery, particularly as it relates to the requirement of interest payments on loans and credit lines. Greco’s work highlights the destruction, inequality and powerlessness facilitated by the current monetary regime, of which the creation of debt is a primary component. Debt creates power differentials between borrowers and lenders through for instance, the requirement of interest payments, resulting in “the continual transfer of wealth from producers [created by their time and labor] to relatively non-productive money-lenders” (Greco 1998). This has fostered antagonistic and often coercive relationships and lies at the heart of a dysfunctional global monetary system, which itself supports the concentration of wealth and power in the hands of an elite, as well as poverty, ecological damage and war (For information on Greco’s work, please see his website at http://azstarnet.com/~circ/circhome.htm). For the purpose of this article, I attempted to calculate how much I will owe in student loans, including accrued interest, at the end of my loan period. I got depressed and gave up on this task after my initial calculations suggested that I may be paying nearly twice as much money as I initially borrowed to go to school because of interest charges. For many of us however, student loans and various lines of credit are the only way we can attend school and graduate before middle-age. Perhaps the next article will be about the importance of free education (publically-supported or private scholarship funded) so that everyone may have the opportunity to attend and complete college!

On the international level, movements such as Jubilee 2000 call for the cancellation of all debt, arguing that the debt repayment policies required by the World Bank and International Monetary Fund have led to decreases in the production of basic foods, have required the removal of subsidies on food and medical services thus making them more difficult to secure, have contributed to unemployment, and have brought rising poverty and hunger to “Third World” countries. As examples of debt slavery and the continual transfer of wealth to which Greco speaks, Jubilee 2000 notes that “the International Monetary Fund (IMF) received $600 million more in debt payments from Africa in 1997 than it returned in loans” and “in Africa, governments are now transferring four times more to international creditors than they spend on basic education and health.” (For more information on Jubilee 2000, please visit their website at http://www.j2000usa.org/j2000). And as most of us can attest to, debt is a daily reality for many in the US as well. While doing work at some of the local food banks, I have had the opportunity to talk to many folks whose jobs allow them to pay for housing and make payments on debts, but leave little money to buy food. Similarly, as part of their economic human rights campaign, Food First provides testimonies from folks who for a variety of reasons, are homeless and/or unable to obtain adequate food supplies, further testifying to the disparity of wealth in our nation. These testimonies as well as information on the economic human rights campaign are available at www.foodfirst.org.

Another alternative to big chain banks may be to create a structure by which community members pool their savings to support locally-owned, environmentally and community friendly businesses. Folks could create a non-profit, cooperative organization. The non-profit could then collaborate with an existing local bank to set up savings accounts that will act as collateral for loans for projects generally considered too risky for the bank, such as the creation of a locally-rooted, cooperatively-owned grocery store. For instance, ten people could open $500.00 savings accounts and allow their savings to be used as collateral for loans, and in addition to collateralizing loans, the non-profit could also screen loans on the basis of social and environmental criteria as well as sound business plans. Moreover, lending decisions would not just be based on cold “computer program criteria,” but personal relationships. Essentially, this could allow members to take the financial “risk” and to gear loans towards locally based, environmentally sensitive and community friendly businesses. On the other hand, the bank could handle all the legal and financial paperwork as well as federal and state regulation issues and at the same time, build its Community Reinvestment Act rating and attract new customers. The framework for this program was created by the E.F. Schumacher Society, and is called the SHARE Program (Self-Help Association for a Regional Economy). It is a micro-loan program which was formed in 1983 in Great Barrington MA. According to one representative, given the success of the SHARE program in Massachusetts, members have recently allowed their local bank to handle the loan process entirely, including the screening and collateralizing of loans. Unfortunately, the SHARE program in Massachusetts also charges around ten percent interest, thus, concerns over what Greco refers to as debt slavery are still an issue with this option.

Another option may be a less formal “lending circle,” based on values of social justice, self-sufficiency, democratic local control, non-violence, solidarity, compassionate communication, honesty and genuine equality. For instance, we could create a non-profit, democratic, cooperative structure, within which members could pool their money into a savings account opened by the non-profit organization. The lending circle would handle all paperwork and regulatory issues and would not have the same kind of relationship with a local bank as does SHARE - the savings account would simply be held by the non-profit at a chosen local bank or credit union. Once a chosen dollar amount is reached, the money could be lent out in the form of small demand loans, at no or low interest and with a small fee, to environmentally and community friendly projects, backed up by sound business plans, that are chosen by censuses among the members. Once the money is repaid, other projects could then be chosen; projects could range from buying a stove for a local organic grocer, to providing some start-up capital toward the creation of a local agricultural producers co-op. Such a structure could help bring folks together and inspire people to - as a community - more directly and democratically chart the direction of community development. In addition to the provision of no or low interest loans, the organization could also facilitate education on a host of issues including compassionate communication, specific community issues, the cooperative model and progressive social change more broadly. Overall, this option could help to enhance both community solidarity as well as the life-serving values of our community. Formal and informal cooperative financial arrangements span the globe and have a long history of success in enhancing community democratic control and sustainable community development; Yes! Magazine for instance, routinely provides examples of community-rooted, socially-conscious financial (and other) projects around the world. Characteristics similar to those of lending circles can also be found in Greco’s (1990, 1997, 1998) discussions of exchange and barter networks such as Michael Linton’s “LETS” (Local Employment and Trading Systems) which is itself characterized by exchange within a certain area without interest charges, coercion, or the creation of a privileged class (Greco 1997). A lending circle could offer a way out of the debt slavery system, could facilitate positive and non-antagonistic relationships between community members, could bring folks together and could help us pursue financial and development paths more in line with life-serving values.

The simple point of the article is this: We need not be beholden to mainstream, big chain often impersonal financial corporations whose practices may be in conflict with our core values. We may instead take steps to support ideals, projects and goals that better serve the life paradigm as opposed to the money paradigm. As poet Martín Espada notes, “We have to imagine the possibility of a more just world before the world may become more just” (qtd. in Coop America Quarterly, 2001). Several of us are interested in creating a lending circle or similar framework and are looking for folks interested in becoming involved. For more information and to help, please contact me at jlu@dana.ucc.nau.edu. You may also leave messages for me, Jesse Urban, at the Department of Political Science, 523-3163. Similarly, you may contact Becky Daggett with Friends of Flagstaff’s Future at 556-8663 or friends@infomagic.net, as well as Chuck McDougal with Peace Workshop International at chuckaz@infomagic.net or 774-0479/526-4796.

BIBLIOGRAPHY

Sarah Anderson (2000) Views from the South: The Effects of Globalization and the WTO on Third World Countries Co-Published by Food First and the International Forum on Globalization.

Thomas Greco (1997) The Cooperative Community Commonwealth: A Prospective Outline for a New Socioeconomic Framework Tucson: Thomas Greco, Jr.

Thomas Greco (1996) “Money: A Permaculture Approach” Permaculture Drylands Journal no. 26:12-14.

Thomas Greco (1990) Money and Debt: A Solution to a Global Crisis Tucson AZ:
Thomas Greco Jr.

Thomas Greco, Jr. (1998) The Equity Mortgage: An Alternative to Usury Tucson, AZ.

Ahmed Shawki and Paul D’Amato (2000) “The Shape of World Capitalism,” International Socialist Review 11: 7-8.

Vandana Shiva (2000) “Globalization and Poverty,” Resurgence 202: 15.

Starhawk (1987) The Spiral Dance New York: Harper Collins.