Walking my Talk

I've been preaching the Move-Your-Money line but I hadn't actually done it.  I have all kinds of excuses: A labyrinth of accounts all interconnected with my family and business, Loans that give me a good deal that I can't match elsewhere, the enormous time and effort it will take to change all my auto deposits and withdrawals, and there isn't a credit union to join with a branch within walking distance.  Ugh.  Moving my money was way too much of a hassle.  But it ate at me that I wasn't aligning my actions with my values so during the winter holidays, I decided to actually make the move.

I chose People's Bank of Washington.  It's a community bank with 24 branches in my region including one in my very own down town.  A mere two mile walk away from home.  Scott Chambers, the Assistant Branch Manager spoke with me and my husband and gave us a warm welcome as well as a lot of help getting started with the new bank.

What I didn't know when I started the process, was how much I was missing by not banking locally.  Scott offered us personal service and I don't mean he just gave it lip service!  When I called the bank to get a question answered, the woman who answered the phone introduced herself, "Hi, I'm Bridget Barrington, the bank manager, I opened the door for you today.  I'm sorry I didn't introduce myself then!"  I couldn't believe it!  And when I went in to deposit a check today, Bridget came up to me to introduce me to the teller.  Wow.  I get the feeling that I will be able to work with these people.  When I told my mom about the experience (and recommended that she move her money to People's) she remembered that more than 40 years ago she and dad had gotten amazing personal service from a bank when they were traveling.  The bank sent them money (it was before the days of ATM's) at different stops during a round-the-world tour and once, when mom and dad didn't pick up the money at the time the bank thought, the banker called their friends to make sure everything was okay!

Perhaps there is still room in the world for a personal banker for even, not wealthy me!  I recommend to all of you who haven't yet taken the time or made the effort to move your accounts to a local bank, Do it Now!  You'll be happier when you do.

A State-Owned Bank: Is it a good idea?

There have been many articles in the papers recently like the one that appeared in Bloomberg Businessweek last week.  It's about the Bank of North Dakota, the U.S.A.'s only state owned bank.  North Dakota, remarkably enough, has a budget surplus and the credit is flowing to small local business.  This seems largely due to North Dakota's state-owned bank.  The bank does not take consumer deposits, but North Dakota's state agencies are required to put their funds in in the bank.  The funds are used for economic development in the state including student loans, venture capital and disaster relief loans.  The bank gives half of all its profits to the state.

I like the model but the down side, as pointed out by Amy Cortese in her book Locavesting, is that a state-owned bank creates a link between money and politics (although I would suggest that link already exists in a way that politicians benefit from but the citizens do not).  The governor of North Dakota essentially controls the bank because whoever is in office acts as the bank chairman and appoints the bank's advisory board.

Representatives in my home state, Washington, and many other states are launching initiatives to start local banks mostly because of the successes in North Dakota.  According to the Washington State Bank Analysis done by the Center for State Innovation, a Washington State Bank could "could help
create or retain 7,400‐10,700 jobs....could generate roughly 8.2% or about $2.6B in new lending activity" and "could generate dividends for the state starting in year 3."

A group of Democratic leaders introduced House Bill 1320 to the Washington State Legislature in January of 2011.  Progress and a summary for the bill can be found here.

Although the state bank in North Dakota seems to have increased the health and number of banks in North Dakota, many people are wary of the movement toward state-owned banks. The Bloomberg article says, "Democratic and Republican lawmakers in 13 states introduced bills this year to study or start state-run banks....a prospect that does not sit will with commercial lenders. It's 'socialistic' says Camden R. Fine, president of the Independent Community Bankers of America, a Washington-based lobbying group that represents more than 5,000 community banks."

I think we could benefit from a well regulated state-owned banking system.  Perhaps I'm naive, but I think the officials in Washington are interested in the benefit to the local business community and the citizens of our fair state.  What do you think about the prospect of state-owned banks?

Surfer Kyle Theirmann Moves his Money

Kyle Thiermann, a surfer tells us about banking and reminds us:

"You have the power to stop funding the problem and start funding the solution." 

"Through your daily decisions you have the power to Change the World."

Kyle has been responsible for people moving hundreds of millions of dollars out of the big banks into local banks and credit unions.  His website, surfingforchange.com has some great movies of surfing and more excellent information.  

Here's his video on the importance of buying local:

Hooray for Kyle!  He's showing everyone can make a difference.  You too!

Crowdfunding with a Return

A good friend of mine told me he had been playing the investor on Lending Club, a crowdfunding site where people in need of a loan can connect with people (maybe lots of people) willing to lend to them.  He was excited by the fact that he could look at the investment possibilities (people who need a loan) and see their credit history, their story and other information and he could make his own decision about whether or not to lend to them.  So far, he's making an excellent return!

Lending Club was number 20 on Forbes' list of the 100 most promising companies in America. As of the beginning of this month lending club has originated more than $430 million in loans and investors on the site have made more than $36 million in interest.  Sounds pretty good!  No wonder my friend is happy.

Another crowdfunding site that is getting some press these days is CrowdCube. Crowd Cube claims to be the world's first crowd sourced equity finance for private businesses.  The Rushmore Group raised one million pounds sterling in equity financing on the site.  Rushmore Group is the sixth deal to close on Crowd Cube.

It might be possible to do this kind of thing in the United States before too long.  The House Bill that passed in November, The Entrepreneur Access to Capital Act, is now in the Senate.  It's been renamed The Democratizing Access to Capital Act of 2011 and is numbered S1791. Scott Walker, a lawyer wrote an excellent blog post on What StartUps Should Know About the U.S. Crowdfunding Bill. The bill had a hearing in the Senate Banking Committee on December 1st.

Moving Your Money: Investments

Is your money, like mine, in gigantic Mutual Funds you know almost nothing about?  I hate to think about what I’m actually invested in so I took a look at what Fidelity’s Asset Allocation fund, Asset Manager 60%, is invested in.  Their top 10 include a number of treasury notes and bonds and Fannie Mae and Freddie Mac and Barclays and Apple.  They have almost 3000 different holdings in the fund.¹  The treasuries tend to support the big financial institutions and I’m just not sure how I’m feeling about Fannie Mae and Freddie Mac these days. 

I want to put my money somewhere that is controlled by real people not Wall Street algorithms.  I want my money to be put to work to create real value for real people; health, happiness, well being.  The things Robert Kennedy suggested were missing from our GDP in this wonderful speech of his:

I discovered a fund that seems to hold real value at the heart of its investments AND make a good return.  Portfolio 21.  Portfolio 21 was written up in the June issue of  Financial Advisor’s article, New Ways to Measure Risk: Portfolio 21’s Black Swan Strategy has Delivered Alpha Nine Years Out of Ten.  Their strategy of investing based on sustainability factors has been very successful when measured against the S & P 500 Index.  Portfolio 21's 10 year performance is nearly twice the S & P 500.

Check them out and let me know what you think.  I'm moving my money!

¹ Accessed November 26, 2011: http://fundresearch.fidelity.com/mutual-funds/summary/316069582?refpr=MFEval_40f

Occupy Thanksgiving

What is Occupy Wall Street about?  While people continue to camp out in the streets in cities all over the country, many of us are discussing them. The Occupy movement is about basic values and principles of social justice.  Many of us feel that the government is not adhering to our principles of fair play and mutual loyalty and support.  Perhaps if we stand in the street someone will notice – notice that our work, our lives, our families, our homes, our country, matter to us. 

Photo: Tom Giebel

Our government seems to have forgotten that we are the country, and that our wellbeing is the wellbeing of our country.  The GDP doesn’t measure us.  Vast -- almost unimaginable -- sums of money are being poured into the banking system.  Wars are being fought for we know not what.  Laws are passed to benefit the oil industry and agribusiness at the expense of the rest of us. That money needs to come home to America – to the people in the opening words of the Constitution, “We the People”. We need jobs, we need health care, and we need homes and a decent education for our children.  We need to pay off our debts and let go of a lot of our stuff.  We don’t care about having more; we care about having enough. We care about each other.  We care about our neighbors, our land, our towns and our cities. 

As we give thanks this week, we think about the simple things that we are actually thankful for, the people we love, the earth beneath our feet, the beauty of love and life.

Crowd Funding Private Equity is on its way!

What is crowdfunding?  This video gives you an introduction.  Why can't we crowdfund as investors already?  Because in order to invest in private businesses you must be someone wealthy (over $1 million in assets) and have gone through a process to become an accredited investor.  Even if you've gone through that process, it's not always easy to find the kinds of investment opportunities you're looking for because the regulations limit publicizing private equity opportunities.  These regulations were put into place to protect the public from schemers and shysters. They figured the people of high net worth were less vulnerable to schemers. 

AND by not allowing the 99% to invest in private businesses (except their own or their family's) the opportunities to get our money out of Wall Street and on to Main Street are very limited. This bill, which seems likely to pass, would make give the opportunity to invest in private businesses to all of us.  That gives us the opportunity to support businesses we know about and care about.

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So, just one week ago, I let out an involuntary whoop! when I saw this image on twitter: 

Introduced by a Republican member of the house, Patrick McHenry of North Carolina, the Entrepreneur Access to Capital Act is a truly bi-partisan bill.  President Obama made an official statement in support of the bill the day before it passed. The bill amends securities law to be user-friendly (or not at all so onerous) for small businesses to attract small-time equity investors who are not necessarily wealthy (accredited) investors.  The official text of the bill is likely to change in the Senate so keep an eye out!

Although I like the game-changing aspect of unleashing the small money of the masses to help small businesses  there are big potential pitfalls to investing in private businesses.  Small businesses, especially startups, often fail and then you're left with nothing.  Your shares in small business can't easily be liquidated.  If you need to get your money out of your shares in private business, that is pretty much impossible to do.  These investments are not publicly traded.  You can't just put them on the market to sell, because there isn't a market and regulations are different for private equity shares then for the kinds of stocks you're used to!  So watch out! This stuff is risky.