Life savings, looking for a good home
April 8, 2017 4:40 AM Subscribe
Would moving my money out of Bank of America decrease their ability to fund enterprises that I find unethical or detrimental? If I move my money to a credit union, is there any guarantee my money will be used for more ethical or positive purposes? If not, is there a better alternative?
I currently have checking and savings accounts with Bank of America. I've been thinking about moving my money to a credit union (probably MITFCU) because I've read that Bank of America is using my money to invest in various things enterprises I find objectionable, like DAPL, fossil fuels industries, etc.
However, I'm feeling unsure that credit unions are required to be more responsible. I tried to read the federal laws regarding credit unions, but I'm no expert, and it wasn't clear to me that they are actually limited to nice ethical investments. I called MITFCU, and they reassured me, but couldn't actually give me any particular guarantees about what they do or don't invest in.
I therefore have three questions:
1. Would moving my money out of BoA have some kind of impact (however microscopic) on their ability to invest in things like DAPL or fossil fuel corporations?
2. Is there any guarantee that a credit union (such as MITFCU) is not investing in similarly destructive things. Is there some way to find out what they do or do not invest in?
3. Is there a better place to keep my money where it is safe, is available, earns some amount of interest, and doesn't support unethical/detrimental ventures?
I currently have checking and savings accounts with Bank of America. I've been thinking about moving my money to a credit union (probably MITFCU) because I've read that Bank of America is using my money to invest in various things enterprises I find objectionable, like DAPL, fossil fuels industries, etc.
However, I'm feeling unsure that credit unions are required to be more responsible. I tried to read the federal laws regarding credit unions, but I'm no expert, and it wasn't clear to me that they are actually limited to nice ethical investments. I called MITFCU, and they reassured me, but couldn't actually give me any particular guarantees about what they do or don't invest in.
I therefore have three questions:
1. Would moving my money out of BoA have some kind of impact (however microscopic) on their ability to invest in things like DAPL or fossil fuel corporations?
2. Is there any guarantee that a credit union (such as MITFCU) is not investing in similarly destructive things. Is there some way to find out what they do or do not invest in?
3. Is there a better place to keep my money where it is safe, is available, earns some amount of interest, and doesn't support unethical/detrimental ventures?
Best answer: 1) In the context of removing available assets for BoA to invest in, yes, it will impact their ability, but it is microscopic. Microscopic, but not an unworthy goal.
2) Investing in a credit union does not guarantee it can't invest in similarly destructive thing - credit unions are simply required to be non-profit that serves a community of members where profits are reinvested back to serve the members (dividends, lower interest rates, less fees, etc.) rather than taken as profit for investors.
This does not prevent, necessarily, the CU from making investments or making loans for the benefit of its members in things you would otherwise find ethically problematic. It might also be helpful for you to take a look at local state laws that govern how credit unions are allowed to invest. (None state they can't invest in ways that could be arguably destructive ventures). Same with Federal laws on the matter. In reality, laws aren't really going to control this, since what's "ethical" or "detrimental" is subjective in this context - the only way would be a very specific limitation on what sort of instruments the CU is allowed to invest in (i.e. if the CU can't make loans to corporations or invest in stocks or bonds, that would severely limit it's ability to work with orgs that you think are doing questionable things - but also at the detriment of its members and other orgs that are doing nothing wrong)
You're best off seeking out specific financial institutions that are mission driven and explicitly state that they only work in ethical ventures. Or in the case of many community development banks, are clear that their investments come in the from of low interest loans to low income members of the community. In many cases, some of these banks and credit unions are also certified B-corporations.
Since MITFCU doesn't have any explicit mission or commitment to the sort of ethical investing you're talking about, a call to a front line CS rep wouldn't help you - you'd need to specifically ask someone with knowledge of their investments as to their asset sheets - which may be a herculean task and a waste of time vs simply seeking out an org that explicitly states it in their mission and is transparent about investments.
Without endorsing any herein, you might find some of the banks listed here as a starting research point.
posted by Karaage at 5:37 AM on April 8, 2017 [1 favorite]
2) Investing in a credit union does not guarantee it can't invest in similarly destructive thing - credit unions are simply required to be non-profit that serves a community of members where profits are reinvested back to serve the members (dividends, lower interest rates, less fees, etc.) rather than taken as profit for investors.
This does not prevent, necessarily, the CU from making investments or making loans for the benefit of its members in things you would otherwise find ethically problematic. It might also be helpful for you to take a look at local state laws that govern how credit unions are allowed to invest. (None state they can't invest in ways that could be arguably destructive ventures). Same with Federal laws on the matter. In reality, laws aren't really going to control this, since what's "ethical" or "detrimental" is subjective in this context - the only way would be a very specific limitation on what sort of instruments the CU is allowed to invest in (i.e. if the CU can't make loans to corporations or invest in stocks or bonds, that would severely limit it's ability to work with orgs that you think are doing questionable things - but also at the detriment of its members and other orgs that are doing nothing wrong)
You're best off seeking out specific financial institutions that are mission driven and explicitly state that they only work in ethical ventures. Or in the case of many community development banks, are clear that their investments come in the from of low interest loans to low income members of the community. In many cases, some of these banks and credit unions are also certified B-corporations.
Since MITFCU doesn't have any explicit mission or commitment to the sort of ethical investing you're talking about, a call to a front line CS rep wouldn't help you - you'd need to specifically ask someone with knowledge of their investments as to their asset sheets - which may be a herculean task and a waste of time vs simply seeking out an org that explicitly states it in their mission and is transparent about investments.
Without endorsing any herein, you might find some of the banks listed here as a starting research point.
posted by Karaage at 5:37 AM on April 8, 2017 [1 favorite]
Best answer: I work for a credit union that does indeed fund ethical things that are good for the communities we serve. For example, we use our members' deposits to fund loans to people who would otherwise have trouble getting loans (low-income folks, people of color, women, etc.), and to fund loans for things like child care centers and solar farms. We do not invest in DAPL.
1. Yes. Very microscopic, but it's something. It will probably have a slightly bigger impact if you make sure to contact them and tell them why you are moving your money.
2. No guarantee, but look for a CU or community bank that has an explicit mission to fund ethical stuff. Look at their websites, annual reports, etc. to find out what they invest in.
3. Credit unions are often a good option to do what you want to do. There is also a whole field called "Socially Responsible Investing" that is all about this. Here are some places to get more info about various socially responsible investing options:
info from the SRI Conference
info from USSIF (good org in the SRI world)
info from Green America (resource for people with your same goal)
posted by aka burlap at 5:37 AM on April 8, 2017 [2 favorites]
1. Yes. Very microscopic, but it's something. It will probably have a slightly bigger impact if you make sure to contact them and tell them why you are moving your money.
2. No guarantee, but look for a CU or community bank that has an explicit mission to fund ethical stuff. Look at their websites, annual reports, etc. to find out what they invest in.
3. Credit unions are often a good option to do what you want to do. There is also a whole field called "Socially Responsible Investing" that is all about this. Here are some places to get more info about various socially responsible investing options:
info from the SRI Conference
info from USSIF (good org in the SRI world)
info from Green America (resource for people with your same goal)
posted by aka burlap at 5:37 AM on April 8, 2017 [2 favorites]
I mean a group of arms dealers could form a credit union for their employees and as long as the commercial loans were less than 12% of assets they could be financing cluster munition manufacturers while the remaining assets were employee mcmansion and mega yacht mortgages.
posted by JPD at 5:39 AM on April 8, 2017 [2 favorites]
posted by JPD at 5:39 AM on April 8, 2017 [2 favorites]
Also regarding the safety of CUs vs banks: credit union deposits are insured up to $250,000 by the National Credit Union Administration. It's basically the CU version of the FDIC. So for a regular deposit account, a credit union account with anything under $250,000 in it is just as safe as a bank account.
posted by aka burlap at 5:43 AM on April 8, 2017
posted by aka burlap at 5:43 AM on April 8, 2017
You might be interested in Calvert socially responsible funds. Contrary to popular misconception, not all funds like this are only about investing in litmus-test-passing companies; there are some kinds of companies they won't invest in, but they do invest in some "imperfect" companies and then try to work to shape policy for those companies. They don't have huge dramatic coup-like effects, but they do add an important voice to the mix that seems to be otherwise missing.
And, yes, I think people should vote with their feet and their dollars. Saying it's useless because the impact isn't large enough is like not bothering to eat vegetables because one meal doesn't make enough of a difference.
You doing this isn't just about how much of a difference your personal funds make; you also normalize the experience for others, you learn things you can tell others, and you make yourself into another person who doesn't put up with this nonsense -- validating and encouraging that choice in others.
posted by amtho at 6:14 AM on April 8, 2017 [1 favorite]
And, yes, I think people should vote with their feet and their dollars. Saying it's useless because the impact isn't large enough is like not bothering to eat vegetables because one meal doesn't make enough of a difference.
You doing this isn't just about how much of a difference your personal funds make; you also normalize the experience for others, you learn things you can tell others, and you make yourself into another person who doesn't put up with this nonsense -- validating and encouraging that choice in others.
posted by amtho at 6:14 AM on April 8, 2017 [1 favorite]
Yes. Deposits allow banks to make loans. To the degree your deposits fund things you find objectionable taking you deposits out reduces their ability to make loans.
I mean, that's the classical theory. In practice, most of the funds available to U.S. banks for lending of this kind come from completely different sources. Speaking super-generally, banks could probably function fine with no deposits at all, but various regulatory schemes make it more convenient for them to continue the practice.
posted by praemunire at 9:45 AM on April 8, 2017
I mean, that's the classical theory. In practice, most of the funds available to U.S. banks for lending of this kind come from completely different sources. Speaking super-generally, banks could probably function fine with no deposits at all, but various regulatory schemes make it more convenient for them to continue the practice.
posted by praemunire at 9:45 AM on April 8, 2017
In practice, most of the funds available to U.S. banks for lending of this kind come from completely different sources. Speaking super-generally, banks could probably function fine with no deposits at all, but various regulatory schemes make it more convenient for them to continue the practice.
Uh normally you are on spot on on finance threads but a bank without deposits isn't a bank, and lending without deposits is a very low roe activity in the long run. Basically all of the economic value in a bank is derived from it's deposit franchise.
posted by JPD at 1:19 PM on April 8, 2017
Uh normally you are on spot on on finance threads but a bank without deposits isn't a bank, and lending without deposits is a very low roe activity in the long run. Basically all of the economic value in a bank is derived from it's deposit franchise.
posted by JPD at 1:19 PM on April 8, 2017
Definitely look into SRI, as mentioned above.
Besides Calvert, some other funds to consider:
Domini Social (my favorite)
Parnassus
Pax World
Brown Advisory
Note however that these are generally mutual funds that you invest in for the long haul, not a checking account. Although I suppose you might be able to tie one to a checking account ...
posted by intermod at 3:23 AM on April 10, 2017
Besides Calvert, some other funds to consider:
Domini Social (my favorite)
Parnassus
Pax World
Brown Advisory
Note however that these are generally mutual funds that you invest in for the long haul, not a checking account. Although I suppose you might be able to tie one to a checking account ...
posted by intermod at 3:23 AM on April 10, 2017
This thread is closed to new comments.
2. A generic credit union - no. There is nothing inherently more ethical about a credit union. But you should be able to underwrite a specific credit unions lending policy. Probably just ask them. If they are acting in a way aligned with your social interests they will be eager to to talk with you about it.
3. That's as safe as a bank account? Probably not. But socially aware products exist at pretty much every level of risk tolerance. Of course they have other problems, but that's not the question you are asking.
posted by JPD at 5:30 AM on April 8, 2017 [2 favorites]