Until recently the world shared an unspoken but ancient belief that bankers should be revered as a secular priesthood that ministers to capitalism, a new universal religion. They manage the orderly flow of financial transactions, guarantee convenient access to liquid assets, and use society’s savings to finance economic growth, catalyze job formation and broadly increase wealth.
Historically, this “priesthood” interpreted privileged economic information, asserted prescience, and professed to slay the demons that devour savings. Accordingly, it occupied the top rung of capitalist hierarchy, worked in palatial surroundings and resided in elite compounds far removed from dirty streets and factory floors.
But the truth is that large banks attract personal savings to finance mass consumption, large businesses and speculative securities trading. More recently these banks systematically victimized economically disadvantaged people. The entrusted private savings no longer finance enterprise formation, opportunity creation, environmental protection or stable home ownership.
Reflecting on similar conditions shortly before his appointment to the Supreme Court, Louis Brandeis wrote in 1914: “The goose that lays golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose.” Not much has changed in 100 years.
But it doesn’t have to be that way. During the 20th century great progress was made in expanding political transparency, civil rights, equal opportunity and personal freedom. Environmental protection, consumer rights and open markets became the norm of social responsibility. New technologies democratized personal communication. Solitary voices everywhere, crying to unleash the human spirit, sang truths of change that became a chorus, and ultimately created new norms of institutional behavior. Except in banking.
But the feeble voice of socially just banking is rising. In 1967, nine years after earning a degree in English from Loyola, I led a group of colleagues to create America’s first bank program to finance minority-owned businesses. During the following decade this group created the nation’s first community development bank, helped design and then testified to secure passage of the Community Reinvestment Act (CRA), assisted Grameen Bank and BRAC in Bangladesh to establish the legitimacy of large scale micro-credit to empower poor rural women, and helped launch the National Co-op Bank. In the years that followed we inspired President Clinton to incent banks to invest in community development; launched America’s first environmental bank; invested in and/or advised fledgling local development banks in Africa, Asia and Eastern Europe; and co-sponsored the formation of the Global Alliance for Banking on Values to promote triple bottom line performance, transparency and inclusive governance.
But the road to social justice is difficult and eternal. Recently, several colleagues have begun working with me at CURL on the Campaign for Better Banks (CABB). Our objective is to restore credibility to the nation’s banking system, help it to become the leader of equitable economic growth, pledge to “do no harm” and embrace ethical standards to always act in the public interest. We aspire that our solitary voice will join others, become a chorus and inspire socially just banking.
