As we end this year of economic turmoil, now is a good time to reflect on how values influence financial returns. The financial crisis we experienced this year illustrates how closely linked business ethics and responsible investing are to long-term financial sustainability for individuals and our nation’s economy. The greed that drove some of the exotic products and non-prudent behaviors that are at the heart of the financial meltdown clearly are unsustainable. As a result, ethical investing or socially responsible investing has become even more appealing to those looking for a match between their personal values and their financial investments.
Socially responsible investing describes an investment approach that seeks to maximize both profit and social good, including community development and environmental sustainability. Socially responsible investors, rather than focusing on short-term results will concentrate on the long-term impact of their investments. Here is a short checklist of questions to help those who are considering socially responsible investing:
• What are your personal values? What do you want to support and what do you want to avoid?
• What companies and/or mutual funds line up with your values? Is there a priority set of values that you want to use to screen your investments?
• What metrics are available to compare investment opportunities against your priority values?
• What level of risk are you willing to take? How can you find a safe alternative for that portion of your investments that you do not want to put at risk?
It is important to note that if you wish to make as socially responsible investment, there are places other than the stock market to invest your money. Community development banks offer a good “safe haven” in which to invest and make a difference, providing FDIC insurance and a guaranteed rate of return.
Community development banks, like ShoreBank are performing well while still offering loans and banking services to underserved populations. Who would have thought that your 2009 SRI portfolio could include a savings account?
ShoreBank is considered a pioneer in socially responsible investing. As a triple bottom line company that measures profitability, community development and environmental impact, we find growing customer interest in our range of market rate, FDIC insured deposit products. Just as we measure our social responsibility, so you should also evaluate a company on its social responsibility, prior to investing.
CommunityInvest.org and SocialInvest.org are great additional references if you are considering taking the first steps in socially responsible investing. I also invite you to take a closer look at ShoreBank, both online (www.shorebankdirect.com) and by speaking in person with our Mission Based Deposit team representative at 1-800-669-7725.
Happy Holidays! This season is a time for giving, especially to those in need. In the midst of our last-minute holiday preparations, it is easy to overlook the gift that the Federal Reserve has recently given. I know that varying opinions abound regarding the Federal Reserve’s past performance and decisions. Let us momentarily set aside those evaluations. I feel that the Fed’s recent decision to cut the target for the federal funds rate to a range between zero and 0.25 percent can be perceived as a gift. Many of you might have expressed, as I initially did, “A gift? From the Fed? In the midst of this economic crisis? But I’m a saver! What does this mean for my interest rate?” While a rate cut isn’t something you can wrap or put a name card on, this rate change does give the gift of hope to those stricken by the credit crunch and on the verge of homelessness.
Mortgage rates are at their lowest level in 37 years. This is great gift to almost all homeowners, even those to whom the recession has not financially impacted. Even a small decrease of 0.5 in your mortgage interest rate can make a financial impact.
The Fed’s rate cut enables ShoreBank to give, through its Rescue Loan program, the gift of increasingly affordable continued homeownership. As our SVP of Mortgage Lending and ShoreBank Voices blogger Michelle Collins said on Chicago’s abc7 News “The rates are coming down, so we’ve lowered our rates at ShoreBank three or four times over the last three or four weeks, and the fed’s continuing to cut rates to let us offer more affordable interest rates, so the time is great.”
For when mortgages become unaffordable, individual homeowners begin losing their homes and property values plummet. Since many of these affected borrowers are concentrated in a handful of communities, the impact of these cascading foreclosure is amplified. The net result can ignite a cycle of community deterioration.
That is why the Fed rate is a holiday gift to our economy. For those of you in need, all you need to do is to ask. I can think of few better gifts than one that prevents homelessness.
On that note, I wish you all a very Happy Hanukkah, Merry Christmas, and Happy Kwanzaa.
Last month, I had the distinct pleasure to attend a unique conference in the truly world-class city of Berlin. The conference, organized by KfW, a German Development Bank, focused on how to “green” the financial services industry around the globe – from microfinance institutions focused on the very poor to the larger commercial banks targeting small and medium enterprises in more affluent areas. Particular attention was focused on the innovative work being done on financing of energy efficiency and alternative energy projects throughout the world. The participants voiced a near unanimous concern that the current financial crisis had greatly hindered on-going efforts to green the banking sector and that decisive action was needed in the next few months to maintain the momentum.
The discussion raised a fundamental question about the best strategy for achieving the dual objectives of ensuring adequate financing for green efforts and institutionalizing green lending in the commercial banking sector. My take is that due to the compressed timeline for reorienting the economy away from fossil fuels and given the depth and breadth of the financial crisis, these two objectives may no longer overlap. I am not convinced that we have the time to incrementally incent existing banks to increase their green lending – the hurdles are simply too great to get them to do so and time available way too short. Instead, I think we will need to look seriously at capitalizing (new or existing) institutions focused on the green sector and hope that their efforts and outsized returns lead more established entities to enter the market later.
Certainly, in the US, we have seen how institutions focused on developing financial products for new markets have transformed banking. I need only look outside my window to see the results. When ShoreBank was founded, no banks thought of low wealth areas as ideal places to grow and thrive. Today, ShoreBank faces increasing competition from mainstream banks in these communities and we now have commercial banks and other types of financial intermediaries on nearly every corner surrounding our branches. Our success was a catalyst for a wholesale change in the overall industry. I believe a similar pioneering effort is now needed within the green sector.
Messengers have little to fear when delivering good tidings, but no messenger wants to be the bearer of bad news. Yet the fact remains: we are a long way from victory as the scope of the Panic of 2008 emerges in its full gloom. We are in a consumer-led recession, where loss of wealth from eroding home values and plunging 401(k)s leads to loss of both the ability and the willingness to spend. Less spending leads to less employment, which leads to less wealth in a cycle that is beginning to turn vicious. Eventually the cycle will be broken, but that time isn’t now.
One of the key indicators I watch is the Bureau of Labor Statistics’ weekly count of the number of persons filing unemployment insurance claims for the first time. To be eligible for unemployment compensation a person must:
* Have worked during a one-year period.
* Be unemployed through no fault of his or her own.
* Be physically and mentally able to work.
* Be available for work.
* Be actively looking for work.
Over the last five weeks 2,678,000 Americans, an average of 536,000 a week, met these criteria and applied for unemployment benefits. Nothing like this has been seen since the major recession of the early 1980s. From September 1981 through June 1983, weekly initial unemployment claims averaged 543,000. They peaked at 695,000 in October 1982, and never were less than 434,000.
Today, 4,429,000 Americans are collecting unemployment benefits, compared to an average of 2,725,000 over the last 20 years. Looking back again to the early ‘80s, we see that continuing unemployment claims averaged 3,862,000 and topped out at 4,713,000 in November 1982.
Times were different then, and the enemy was rampant inflation. The Federal Reserve and the Treasury moved more slowly and less aggressively. But the message is that bad times are not going away soon. Keep an eye on weekly unemployment claims, released every Thursday morning for an early clue to a turnaround.
Guest Contributor: Donna Pfeil, VP, Associate Director, Network & Information Security Svcs
The holidays and winter drives many people into hibernation. Who in their right mind wants to brave the snow and ice to buy yet another gift for a distant relative or down egg nog with co-workers whom 40 hours a week with is already too much time spent together? With the Internet you can do both–shop and network–from the friendly confines of your own home. Thanks to social networking sites, such as Facebook, MySpace, LinkedIn, Twitter and others, we can get connect with friends, discover lost classmates and real bargins, even find a new job perhaps with co-workers we might want to one day share an egg nog with, or perhaps make new friends who share similar interests.
But before you are lulled into the false sense of security or comfort that is easily derived from using social networking sites, remember to guard your privacy carefully while communicating. Sometimes, like in any conversation, we can share more than we need to or what is good for us. Social networking sites unfortunately like many other things today, are also targeted by a new wave of cybercriminals, or those who are looking to take advantage or defraud users for their own gain.
So before you begin “hibernating” and surfing the Internet this holiday season, please be aware of some of the dangers lurking online:
· Identity Theft—Social networking sites often include prompts for information like things like age, date of birth, e-mail address, phone number, and mother’s maiden name in order to steal one’s identity that will “open the doors” for others to defraud you. It is wise to never share or publish passwords, social security numbers and other pertinent information that makes it easier for thieves to gain access to programs for doing business online that will end up costing you money and your good credit score.
· Malware—The use of images and video clips by spammers to infect your computer with malware (malicious software, which includes computer viruses, Trojan horses, adware, and spyware). It is easy for a cybercriminal to pose as a member of a social networking site, and then send his “friends” a message containing a link that will silently download harmful software when it is opened. Only open those attachments and programs from people you really know.
· Impersonation—Social networking sites typically don’t authenticate new members. That means the people you meet on a site may not be who they claim to be. Criminals and mischief-makers can also copy photos and information from your profile, and use it to masquerade as you—either online or offline (for instance, by creating a fake ID in your name). Watch out for impersonation in all its forms.
· Social Engineering—Information gathered from social networking sites by criminals seemingly involved in a legitimate enterprise who will steal your identity and use it for their own benefit. Therefore, do not respond via online, despite how much they seem to know about you.
Tips for Safe Social Networking
· Limit the information you post—Be careful about posting facts that might be used by other sites (such as a credit card or bank site) to verify your identity. For your personal safety, avoid posting too many details about your future plans and whereabouts. These details can leave you vulnerable to stalkers, burglars, etc..
· Be discreet—Don’t post anything that you do not want everyone to see. Avoid confidential information whether yours or that of the company you work for.
· Be skeptical—A lot of good information is available online, but there is also a lot of disinformation, rumor, and opinion. Don’t believe everything you read online, and double-check your facts before taking any action.
· Be wary—It’s easy for people on social networking sites to impersonate someone else, such as one of your friends or acquaintances, or to misrepresent the facts about themselves including age, gender, and intentions. Don’t trust someone you have just met online any more than you would trust a stranger encountered in an offline setting.
· Check privacy policies and settings—Take the time to read the privacy policy of a social networking site which will tell you what types of information they will share or sell to third-parties. If you don’t agree with a site’s policies, don’t use it. If the site allows you to adjust how much information about you is available, for instance, by allowing only close friends to view your profile, consider using this feature.
· Validate information requests – Many companies, including ShoreBank, will never solicit you for private information outside of the normal course of business. If you receive any email from ShoreBank or any company asking to verify private information or collecting information and passwords, do not respond to the email. Instead, call the official customer service center of the company and validate the request with a known source.
For more information on identity theft, malware, and ways to protect yourself online, the FDIC has generously allowed us to share this fun and useful video with you–just click http://www.fdic.gov/consumers/consumer/guard/index.html.
Last holiday season, I was in graduate school during what the National Bureau of Economic Research recently declared the “start of the economic recession.” Yet despite my declining bank account balance and lack of income, I had one of the happiest holiday seasons ever. Why? Because I had devised a strategy to minimize my expenses while maximizing my gift giving and holiday festivities.
In this economy, it seems that almost everybody has these same goals. The trick is to find and practice the holiday thrift tips that best suit you. On that note, I interviewed ShoreBankers at our headquarters in the South Shore neighborhood of Chicago, and asked them what advice they would give shoppers hoping not to overstrain their holiday budgets. Here is what ShoreBankers recommend:
1. Save throughout the year. For example, saving just $25/month in a high yield savings account at ShoreBank each month will build a $300 kitty for holiday shopping in December. In addition, you can buy an extra treat with the interest you earn.
2. Stick to your holiday shopping budget. Several ShoreBankers use an Excel spreadsheet that lists who they plan on giving to this holiday season, the dollar amount they have allocated to that person’s gift, a list of budget appropriate gift options, and the final cost of the gift. This kind of tracking helps to avoid negative surprises on credit card bills in January. The key is to be disciplined $25 does not mean $26.
3. Give your time. One ShoreBanker said, “Give time. It’s the most precious gift you can give.” Bake cookies. Make dinner. Give a month of backrubs. For many, the little (and least costly) things have the most meaning.
4. Differentiate between what you “need” and what you “want.” You can then allocate your budget more effectively. If you have a soft spot for certain seasonal products (mine is for seasonal lattes), make a schedule for your treats and stick to it.
5. Primarily use ATMs and debit cards, and account for each transaction. Multiple ShoreBankers said “If you only need $40 from the ATM, resist the temptation to take out $80.” Use a debit card, write down every ATM transaction in your checkbook, and look at your account balance daily. It’s difficult, but even the attempt at completing this task can help you watch your budget.
6. Comparative Shop. Something we all know we should do but it is increasingly relevant as many stores are adding competitive match offers. Plus, you might be able to buy items in a store at online prices without paying for shipping.
7. Discount and Coupon Shop. Some ShoreBankers recommended going to thrift stores, goodwill, or discount racks at brand stores to buy top tier brands at low prices. Search for coupons and “percent off days” for necessary items on your lists. Remember, if you can get a good price on a quality item, it’s still a quality item.
8. Search for free seasonal activities. Most city halls have lists of free events. Who knows, you might even stumble upon a children’s choir performance!
I love the holidays and I hope one of these tips helps you to enjoy the season just a little more. As one ShoreBanker said, “We know the economy is bad. It is what it is. You just have to pay attention and use your money more wisely.”
Chicago got hit with its first snowfall and the forecast calling for rough sledding ahead for the nation’s economy means homeowners will consume more energy at a time when they can least afford to.
Don’t put a ‘bah’ in your ‘humbug this winter. Invest in a solution that has the potential to create good paying jobs and to reduce energy costs by up to 45 percent—making energy-efficient improvements to your homes and offices. This is ShoreBank’s mission because it makes good economic sense—costs are rapidly recouped by the energy-savings whole adding value and comfort to the home—it reduces greenhouse gas emissions which is good for the environment.
On occasion, we want to tell you about our customers who share our values and believe in our mission whose own work is inspiring others. We are very excited that Van Jones, the founder and president of Green for All and a fellow with the Center for American Progress is a high yield savings account customer. In 2007, Van worked closely with U.S. House of Representatives Speaker Nancy Pelosi (D-CA), U.S. Rep. Hilda Solis (D-CA), U.S. Rep. John Tierney (D-Mass.) to pass the Green Jobs Act of 2007, authorizing $125 million to re-train 35,000 people in how to build new green design homes, thereby creating new “green-collar jobs that will be around in the days ahead. Other green jobs include adding insulation and double-paned, low-e windows to increase energy efficiency, and attaching solar panels to homes to reduce electric bills.
It is exciting time because the new administration has sent strong signals that it is committed to an alternative energy strategy that significantly reduces our dependence on foreign oil and safeguards the environment while it helps to put people to work.
As these issues continues to heat up, we encourage you to actively engage in the discussion and check out what Van has to say:
ShoreBank and Van’s organization, Green For All, understand environmental sustainability is essential to the present and long-term health and well-being of our economy and our communities
If you would like to learn more about ShoreBank’s thoughts on this and other issues, please subscribe to our RSS feed. The more people who visit our blog, the greater the impact we can make. Share this link and please let us know what you think!
As we end this year of economic turmoil, now is a good time to reflect on how values influence financial returns. The financial crisis we experienced this year illustrates how closely linked business ethics and responsible investing are to long-term financial sustainability for individuals and our nation’s economy. The greed that drove some of the exotic products and non-prudent behaviors that are at the heart of the financial meltdown clearly are unsustainable. As a result, ethical investing or socially responsible investing has become even more appealing to those looking for a match between their personal values and their financial investments.
It is important to note that if you wish to make as socially responsible investment, there are places other than the stock market to invest your money. Community development banks offer a good “safe haven” in which to invest and make a difference, providing FDIC insurance and a guaranteed rate of return.
Happy Holidays! This season is a time for giving, especially to those in need. In the midst of our last-minute holiday preparations, it is easy to overlook the gift that the Federal Reserve has recently given. I know that varying opinions abound regarding the Federal Reserve’s past performance and decisions. Let us momentarily set aside those evaluations. I feel that the Fed’s recent decision to cut the target for the federal funds rate to a range between zero and 0.25 percent can be perceived as a gift. Many of you might have expressed, as I initially did, “A gift? From the Fed? In the midst of this economic crisis? But I’m a saver! What does this mean for my interest rate?” While a rate cut isn’t something you can wrap or put a name card on, this rate change does give the gift of hope to those stricken by the credit crunch and on the verge of homelessness.
Last month, I had the distinct pleasure to attend a unique conference in the truly world-class city of Berlin. The conference, organized by KfW, a German Development Bank, focused on how to “green” the financial services industry around the globe – from microfinance institutions focused on the very poor to the larger commercial banks targeting small and medium enterprises in more affluent areas. Particular attention was focused on the innovative work being done on financing of energy efficiency and alternative energy projects throughout the world. The participants voiced a near unanimous concern that the current financial crisis had greatly hindered on-going efforts to green the banking sector and that decisive action was needed in the next few months to maintain the momentum.
Messengers have little to fear when delivering good tidings, but no messenger wants to be the bearer of bad news. Yet the fact remains: we are a long way from victory as the scope of the Panic of 2008 emerges in its full gloom. We are in a consumer-led recession, where loss of wealth from eroding home values and plunging 401(k)s leads to loss of both the ability and the willingness to spend. Less spending leads to less employment, which leads to less wealth in a cycle that is beginning to turn vicious. Eventually the cycle will be broken, but that time isn’t now.
Over the last five weeks 2,678,000 Americans, an average of 536,000 a week, met these criteria and applied for unemployment benefits. Nothing like this has been seen since the major recession of the early 1980s. From September 1981 through June 1983, weekly initial unemployment claims averaged 543,000. They peaked at 695,000 in October 1982, and never were less than 434,000.
