Sasha Lilley: Protests against Wall Street have inspired many people to move their money from big banks to smaller banks and credit unions and encourage others to do the same. Why might you be skeptical of this effort?
Doug Henwood: There are several reasons. First of all, I think a lot of the big banks wouldn't be too sad to see some of these customers go. One of the reasons that the Bank of America and other big banks were imposing the five-dollar fee for the use of debit cards was that they're trying to drive a lot of small customers away. They lose money on them and are happy to see them go. So I'm not sure this is going to cause a lot of consternation in the executive suites.
SL: How do they lose money on them?
DH: Because it just takes them a few hundred bucks a year to process the accounts. If the balances and transactions are small, then they're just not worth the bother.
This will also present a problem for credit unions: if they get an influx of smaller accounts, they're also going to be expensive and cause the credit unions problems to deal with. But that's just one issue. I think there are larger ones as well. The credit unions have for the most part more money than they know what to do with right now. They've had a growth in assets, not merely just over the last few days — actually some of the numbers I have sound impressive, though on closer scrutiny they're not that gigantic — but they've had an influx in assets over the last several years. And more than half of that influx of assets has gone into things like Treasury bonds and Ginnie Maes. They don't have enough places to plough their money into locally or for the benefit of their members, so they buy securities. And you don't get any bigger or more irresponsible than the US government, but that's where a lot of this money is going to go — into US government securities. So if you're going to put your money into a credit union, you should think about what the credit union is going to do with that money.
This is even more true for a lot of the smaller banks. When Arianna Huffington started her Move Your Money campaign a year or so ago, I looked at some of the banks that she recommended for my own personal zip code 11238. One was the Carver National Bank, which is black-owned, but has been financing the gentrification of neighborhoods in Brooklyn and Queens, and which has been partnering with Merrill Lynch to introduce wealth management services. Another they recommended, the Apple Bank, had about three quarters of its money in US Treasury securities. So you have to see where the money is going. Small size is not automatically synonymous with virtue.
But also I think we're evading some larger political questions. We need a different financial system, for sure. We need different relationships of ownership — relationships of property. And the proper place to do that is at the political level, not at the level of individual portfolio allocations. Now if people want to move their money into a smaller bank or credit union because the fees are lower or they like the service, that's one thing. But you're not really doing anything all that virtuous by moving your money that way, I don't think. A consumer preference isn't a political act.
SL: Does focusing on banking and finance as a realm unto itself give us a false sense of the role that finance plays within the larger capitalist system?
DH: Yes, there is a longstanding tradition, among particularly the populist side of the American left, of looking only at finance as bad, as if it was uniquely evil, and treating production as virtuous. I can understand why people might do that in some sense. Corporations do produce goods and services that make it easier for us to live our lives; there's no question about that. But they also are vast engines of exploitation and environmental destruction. The corporation makes its money by paying workers less than the value of what they produce. Although production may look virtuous, there is always going to be that relationship of exploitation, despite the alleged virtue of production.
I think finance kind of isolates, sort of purifies, the purely parasitic relationship of capitalist production. It's all about money — money expanding into more money. But it hides the fact that the productive sector is all about that as well. The productive sector only engages in production because they make money on it. If they can't make money on it, they're not going to produce. The whole system is about the expansion of money, not about the production of goods and services, or satisfying of consumer demand, or any of those sorts of things you hear about in economics textbooks or the recitations of publicists.
SL: Do you see the Occupy Wall Street movement and the movements it has spawned as choosing the right target here? Clearly, you're a critic of finance within the larger rubric of the system itself. Do you see this movement as continuing in the tradition of leftwing populism that you just mentioned? Or do you see it as potentially moving beyond that?
DH: I see it as a lot of things. I've been critical of certain aspects of Occupy, but I want to make it clear I think it's mostly the most wonderful thing to happen in a long time, has tremendous potential and possibilities. It's changed the political conversation in this country and even a good bit of the world remarkably. I don't want to make it sound that I'm kicking this thing around. I'm filled with gratitude and admiration for the people who started it and all t