A simple question: What is a bank?
Think about how you would explain it to your children. At the most basic level - a bank is a community resource. The concept has existed for centuries. It’s a place where people can store so that they know it’s safe, and when a group of people in the community all put their money there, a bank has the ability to use the excess to loan out to someone who needs it so they can buy a house, send their children to schools, et cetera. When you deposit the money that you’ve worked for into a bank, there’s an element of trust that is mutually exchanged there. Trust, mutual understanding, and consent are foundational concepts in any relationship. You entrust the bank with an obligation to keep your money safe, so that you can withdraw it if you decide you need to - and in return, the bank is granted the consent of those who deposit their money there to manage these resources so that the arrangement collectively benefits the community.
If the constituents of a bank could all be in the same room and look at each other, there would be a clear understanding of who the stakeholders are, who has invested what, who is accountable for what - not in the sense of “investors” and “shareholders”, but in the sense that these people are a community, and that the bank is an endeavor, an institution, where the security of one depends on the others, and requiring responsibility, trust, and accountability, as does any relationship we decide to enter into.
But this isn’t how it is. And banks are a little bit more complicated than that, aren’t they?
For the first time in history, our epoch is one where the affair of managing money is a business in itself. Stocks, bonds, derivatives, dividends, options, futures, securities… Newly invented financial “products” have made the Financial Industry is one of the most profitable in the world - but not for the constituents who withdraw and deposit the money that they had entrusted; given their consent to store for safe keeping. At some moment in the last couple centuries, while we were all either asleep or drunk on imported champagne, it became so that the completely normal and natural thing to do was to take all the money you have, and promptly give it to a bank. Why, of course! What on earth else would you do with your money, keep it under a mattress? So goes the clichéd response, which scratches the surface of how deeply into the culture the financial industry has embedded the idea of its dominance, so that it can maintain a monopoly on money. Financial companies spend an obscene amount of (our) money to pollute the psychic landscape with ads & marketing campaigns carefully designed to give a charming face as a caring, benevolent institutions faithfully committed to serving you; interpellating a mythical identity of the celebrated consumer: a wholesome and discerning character who invariably walks away from a transaction satisfied, smiling and existentially fulfilled in life, thanks to (product x).
Choose to resist the ingratiating façade, and life gets more difficult for you. On the other side of all the marvelous wares and services banks provide to their beloved flock of consumers lies a field of penalties and inconveniences. Don’t have a credit card? You’ll have to pay your bills with a check at the post office. Don’t have a checking account? That’s an extra fee, and you’ll have to pay seven days in advance. Building credit requires entering into debt, and if you have no credit or bad credit, well, you’d better buck up and pay a a higher deposit for that apartment, or a higher interest rate on that car. But why all the coercion? What’s been swept underneath that Persian rug, anyway, besides a tag reading “MADE IN SWEDEN”?
The self-perpetuation of a culture where the mind-space of the masses is saturated with advertisements and distractions is founded atop the not knowing, the squirreling away of unsavory details of what we are participating in, keeping people in the dark, especially the ones who must keep buying, keep shopping, keep working 14-hour days in a sweatshop in the Philippines. The irrefutible fact is that a bank is a capitalist institution whose bottom line is profit - and to get it, they can do some bad things with our money, making us all unintentionally complicit in practices like investing in nuclear weapons, arms trading with despotic tyrants, privatizing clean water in developing nations, speculating on the price of food, profiting from toxic mortgages in foreclosure… the list goes on and on. The financial industry is like a giant international casino, where bankers gamble our futures away with chips we paid for.
Globalized Capitalism speaks only one language: Profit. It doesn’t discriminate about where it came from. And in a globalized system of finance capitalism, earnings are directly proportional to exploitation. One man’s benefits equal another man’s loss, another woman’s oppression, and a hundred people’s blind eyes. Because money is the lingua franca, giving money to multinational corporate banks effectively empowers them to do with it as they please, and we don’t have much of a say, and accountability isn’t part of a grammar that only understands numbers, returns and currency symbols. There isn’t any venue for an international community of depositors and financial managers to look each other and partake in an understanding of what affairs occur using capital resources. When we aren’t aware of what we’re giving our consent to, we are left disempowered, without agency, control, or freedom to choose. When an unregulated financial industry is entangled with a hazy political system that mirrors this lack of transparency and democratic participation, we have a problem. And when the two are so perversely intertwined that money, power and politics are so much a part of the same orgy that they are indistinguishable, we have an even bigger problem. (Jamie Dimon, you are an asshole.)
As austerity rages and threatens to raze the capitals of Europe to the ground, the operators of the machines that power this system are quickly waking up to realize what the banks have been up to. Iceland’s people have already rejected the public debt forced upon them by irresponsible financial managers through a national referendum. The challenge that lies before us is to bring about the next generation of banking institutions - but will we make the same mistakes of our history? People may want to burn the banks (and rightly so), but the prudent thing is to start to think about what to put in their place.So, let us return to the original question: what is a bank, and more importantly, what do we need it to do? It’s a fundamentally simple question. Instead of chasing the fading dream of endless growth, which inevitably sows recession and hidden repercussions far away from our periphery, how can we establish sustainable institutions that meet our basic needs? Emerging from the disillusionment that the era of virtuosic financial creativity was far too good to be true, let’s take agency over the consensus of what our resources take part in. A community that makes decisions together in a collective relationship based on understanding and trust can make just decisions to create responsible institutions for the future of banking.