5 Reasons to Switch to a Local Lender


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

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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:

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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.

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SOURCE 

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. 

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

 RiseDerivatives.png

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

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SOURCE

 

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:

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SOURCE

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 SOURCE

 

 See the scandals page.

 

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