Your Friendly Neighborhood Banker?

With all the bankruptcies and bailouts this week, it's easy to feel as if the world of finance is nothing but doom and gloom. But for some, there is a silver lining to the Wall Street meltdown.

I recently called the National Banker's Association to get a sense of how the crisis has been affecting smaller banks. They recommended that I get in touch with Paul Hudson of Broadway Federal Bank

The bank was founded in 1946 to help African Americans living in Los Angeles. Back then, Mr. Hudson told me, most banks wouldn't provide loans to then, and his grandfather, Dr. Claude Hudson, saw an opportunity to do both business and to help build the community. Today, they have five branches and 400 million dollars in assets.

Over the years, Broadway Federal has seen its share of hard times. During the civil unrest that followed the Rodney King Verdict in 1992, a fire destroyed the bank's central headquarters. But, Broadway Federal survived. And they continue to do so, even in today's troubled times.

In fact, Paul Hudson told me, current events have actually helped their bank. The collapse of larger financial institutions has created a change in attitude towards small banks like his. "Most people have no relationship with their bank," he explained. "It's the most impersonal relationship they have."

As he said this, I thought about my own bank. Like many other Americans, I've put my money in one of the nation's bigger institutions because it seemed like the "right thing to do." I take comfort in knowing that I can visit any of its nearly 7000 ATM's and get cash any time I want. I appreciate being able to pay bills online, without ever having to write a check. I appreciate that I never have to wait in line because I hardly ever have the need to go inside my bank.

But, as I sat inside Paul Hudson's bank, I began to think I was missing something. It does seem rather odd that all of my money is protected by a group of people I have never met. It might make me feel a lot more connected if I did business with a smaller bank, one where I actually looked people in the eyes and talked with them about my transactions.

Bigger isn't always better. As gas prices soar, more Americans think about buying smaller cars. As Starbucks pop up on every corner, many folks go to smaller, independent coffee shops to have an experience that seems a bit more personal. As we hear more about the environmental impact of flying food in from all corners of the globe, a lot of people are choosing to buy locally grown products, often at their neighborhood farmer's market instead of the big box grocery stores.

Maybe in the wake of this year's financial troubles, we'll start seeing a trend of people investing in their smaller community banks, too.



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My father, a survivor of the 1929 Great Depression taught me this principle many years ago when I was very young. Like the 'Cheers" theme song he would say "always do business with a bank where everyone knows your name." His advice proved to be very wise and it served us well through the years. After our second child was born we needed to move to another home because the home we were living in was very small with only two bedrooms and it was not possible for our son and daughter to share the one very small bedroom. However my husband was laid off his job for 11 months due to declining business and we were doubtful about qualifying for a loan. Fortunately the man who owned the Savings and Loan attended our church and my husband new his son from high school, in fact, we also knew all the employees in this S&L by first name.
He was a very kind man and approved our loan because he knew us and trusted us. His demeanor was similar to Jimmy Stewart in Its a Wonderful Life. I'm sure it was a leap of faith for him but his judgment was well-founded because shortly after we moved my husband was called back to work and twenty-five years later our loan is paid off and we never missed a payment. I'm certain a big corporate bank that only knew from our account number would have rejected our loan application on the spot. Big is definitely not always better.
Our nation is becoming so generic and homogenized that every highway exit looks the same with the usual fast food, gas stations and hotel chains.. This is one reason I support Barack Obama. He has a great plan that will sustain existing small businesses and help new ones get established through the use public-private business incubators. Small businesses not only give a town character, they build community and provide stability.

Sent by Ali Harrod | 9:30 AM | 9-19-2008

I remember my parents using a neighborhood bank in NYC during the 60s. the banker knew everyone's name and always had candy in his desk for kid. (Bad for our teeth, but great marketing.) The teller at my bank knows my name now but that's just because I make a weekly business deposit. But otherwise, I might as well be at mcdonalds.

Sent by nostalgic | 12:20 PM | 9-19-2008

I work in the Credit Union Movement (yes, we consider it a movement) and we find the loyalty levels are high - maybe because some folks still understand that these are financial service cooperatives. We are all in it together, literally.

This feeling is more true with some credit unions than others, to be sure. But when we call on our members to call their congressman to ask for support for their credit union, they are on it. I suspect not very many (if any) customers of banks would do the same.
Credit unions also have a key structural difference that has kept them out of the majority of this mess - locally owned, locally operated with a volunteer board of directors. You can meet the person making the decision on your loan, because they are right there with you.
Makes a difference. Apparently all the difference when we see what financial model remains standing in this meltdown.

Are we perfect? Of course not. But we are not asking for billions either (nor have credit unions ever had a major taxpayer bailout).

Sent by Winter Prosapio | 12:41 PM | 9-20-2008

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