BANKS ARE DANGEROUS TO YOUR WEALTH by Carol S. Greenwald

BANKS ARE DANGEROUS TO YOUR WEALTH

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KIRKUS REVIEW

Ignore the gimmicky title: this is a responsible, informed, precise account of how banking institutions and their government overseers fail to serve the public interest--with some practicable suggestions for reform. Greenwald, now President of the National Consumer Cooperative Bank, learned the money game as the activist Commissioner of Banks for Massachusetts (1975-79). She details the shortcomings of each type of institution (full-service commercial banks, mutual savings banks, savings and loan associations, and, to a lesser extent, credit unions) and the various public-sector regulators (Comptroller of the Currency, Federal Reserve Board, FDIC, Federal Home Loan Bank Board, and National Credit Union Commission). Among her charges against banks are: self-dealing by insiders, principally those who run small thrift institutions; dilatory compliance with equal-employment-opportunity and affirmative-action statutes; exploitation of municipalities' dependence on banks' good offices to issue tax-exempt securities; a 40-year rearguard action to retain ceilings on the interest returns available on passbook savings accounts; redlining, the systematic denial of mortgage credit in racially-shifting inner-city neighborhoods; and reluctance to pay interest on demand deposits (checking accounts). Greenwald also debunks some treasured myths of industry apologists. ""There are virtually no economies of scale in retail banking,"" she observes--meaning that there's little danger the big fish will devour the little ones when interest is paid on demand deposits. And though Congress has corrected some inequities of late, federal regulatory policy, Greenwald concludes, still favors banks at the expense of consumers--in part because of buddy-buddying on the convention circuit. At the heart of her program for reform is consolidation of the five federal regulatory agencies into a single superbureau, geared to serving a consumer constituency. (""There are no sound reasons for combining bank supervision with other functions such as formulation of monetary policy."") Meanwhile, she advises fighting back--starting or joining a credit union, and supporting local activists (names and addresses provided). Well considered and well handled.

Pub Date: Oct. 28th, 1980
Publisher: Prentice-Hall