GoodBank™(IO) – An Ethical Banking Project

Banking We Once Had, Lost and Need Again

What We Had

BankofUS1840Detail

The earliest banks were established by business, civic and religious leaders to grow hometowns, in regions they knew best. The timeline from then to now shows a shift in the size and culture of banking institutions and the movers of capital globally.

What We Lost

Today, most deposits (upwards of 80%) in America’s large cities are held by banks headquartered elsewhere, accountable to no one locally, except regulators in Washington or the state capitols who are easily outmaneuvered through lobbyists, industry political donations and complex financial instrument structures that camouflage the transparency needed to see simple causes and effects.

America’s banking system has lost its roots, has lost its way. “Safety and soundness” used to mean bankers living in and knowing their home regions and the people, businesses, governments and nonprofits there. Now Wall Street financial services mega-banks and investment professionals have fractionalized underwriting, ownership and obligation to the point where hedged bets on leveraged obligations (e.g., home mortgages or corporate bonds) create a rapidly cascading morass of multiplexed risk, drying credit up for other purposes in places where the risks are less or could be underwritten more safely and simply. As rogue traders have shown, the whole house of cards can easily unravel, with the use market capitalization and Federal Reserve costs unwinding such positions entails.

What We Need: An Ethical Bank

We need more ethical banks, where decisions are made transparently, its allegiances trace back to community concern and its pricing of credit and investments is directly tied to the contribution each transaction makes to growing regional health. See, Sustainable Resiliency®

Our ethical bank would build communities by asking: “When we make this loan, change the credit formula or provide new incentives to savers and investors, are we expanding the region’s sustainability and resiliency?” That question inspires us to offer a whole range of banking experiences not readily available today

  • Shop with our credit card on your cellphone and we give you the Means Meter® to help you shift social issues to the top of your shopping list.
  • The cash-back rewards you earn by shopping socially-aware earns your social cause more good.

If you’re a merchant, business, nonprofit or other member of the [SC-Eco], use our bank as a new form of funding, where your social bottom line goals are rewarded through better interest rates and other financial services.

If you’re interested in collaborating to form or use the ethical bank, have some advice or comments, please join the ethical bank’s project wiki at: www.goodbank.info/w  [Feel free to create a user name and password there]

Bruce Cahan

Bruce Cahan is CEO and co-founder of Urban Logic, a nonprofit that harnesses finance and technology to change how systems think, act and feel. He is an Ashoka Fellow, an Adjunct Professor at Stanford University's Department of Civil and Environmental Engineering, a Distinguished Scholar at Stanford mediaX and a former CodeX Fellow at Stanford's Center for Legal Informatics. Bruce was trained as an international finance lawyer at Weil Gotshal & Manges in NYC (10 years) and as merchant banker at Asian Oceanic in Hong Kong (2 years). Bruce graduated The Wharton School at the University of Pennsylvania (B.S. Economics 1976) and Temple Law School (J.D. 1979). Bruce has been licensed to practice law in California (2006), New York (1980) and Pennsylvania (1980).

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