5 Reasons to Switch to a Local Lender

Reason #1: Too Big to Fail = Too Big to Know You


When people belong to a megabank, they are a number. Whether they qualify for a loan or whether they get hit with fees doesn't depend on human reason; it depends on what a computer says. 

Reason #2: Too Big to Fail is Bigger

The megabanks have grown tremendously in the past decade and a half: BankConcentration.png

SOURCE (visual from Dan Braun, unaffiliated)

Reason #3: Too Big to Fail Doesn't Support Small Business

If you were to visit JPMorgan Chase's website, you would see they claim to be the nation's #1 provider of small business administration (SBA) loans.

But Chase boasts merely about the dollar amount of their SBA loans. Here's another way to look at Chase's claim:


SOURCE | SOURCE (In 2011, Chase had $1.1T in deposits and approved $1.1B in SBA loans.)


Local lenders, on the other hand, are far more likely to support small businesses. Although they only have 10% of total bank assets, they make 40% of all loans to small businesses and farms.



Want to know how much your bank loans to small businesses? Look it up here.


Reason #4: Too Big to Fail = Gambling 

The megabanks use deposit money to gamble in transactions called derivatives.

Derivatives are not inherently bad (insurance is one form of a derivative), but much of what happens in the current derivatives market is simply gambling—betting against other traders about whether interest rates will go up or down. Derivatives were a major cause of the 2008 crash, and they are still very much at play today. 


"Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." - Warren Buffett


SOURCE (The chart above shows the first report each year)



Also, a relevant Dilbert comic.



Reason #5: Too Big to Fail = Institutional Scandals

There have been so many scandals recently that we've had to dedicate a full page to covering them. Here is a sample:






 See the scandals page.





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