ShoreBank Blog
The ShoreBank Blog is your place to find ShoreBank news, new product information, and our insight into the banking world.
Archive for January, 2009
Friday, January 30th, 2009
On yet another freezing day in Chicago, it might seem odd to contemplate days when the temperature is over 100 degrees. But that is a great metric for what we are facing with climate change. Chicago currently has about two days a year with temperatures above 100 degrees. If we do nothing about greenhouse gas emissions, by the end of the century, Chicago is projected to have 31 such days. Essentially, each year we would have a month of extreme heat. And while I may not like the cold, I really don’t like extreme heat.
Thinking about roasting in the future is no fun and considering the broader impacts on buildings, ecosystems, and other structures is even less pleasant. However, I recently attended a summit by the Chicago Climate Action Plan, and it had some uplifting news. The City of Chicago has broken down the challenge of addressing climate change into specific tactics, and at the meeting they gave updates on actual progress.
Take housing, for example. Buildings overall are the key issue for Chicago; 70% of emissions come from this sector. This is often a surprise for people because so often we focus only on the emissions associated with transportation. (Transportation is also huge, but only 21%.) Within buildings, you have the housing sector. The city has actually documented retrofits to over 6,000 units of residential housing that have been completed in the past year. Completed! These units are seeing double-digit reductions in energy use – preventing emissions and saving money.
Now 6,000 units may sound like a lot, but the goal is to complete 400,000 by 2020 to mitigate the 1.5 million metric tons of carbon dioxide that need to be offset. So there is huge growth to come. While many organizations will be driving some of these changes, ShoreBank looks forward continuing to encourage more property owners to incorporate energy saving improvements by offering the financial services and technical assistance that make it possible. We like summer – we want to keep it livable!
Tags: Chicago Climate Action Plan, community development, green banking, green building, ShoreBank, triple bottom line
Posted in Green Collar | 2 Comments »
Monday, January 26th, 2009
Why aren’t banks making more loans? Hasn’t the Federal Reserve lowered the cost of overnight, unsecured loans between banks virtually to nothing? Since banks can borrow no-cost money, they should surely make low-interest rate loans to borrowers. In fact, and contrary to the daily headlines, banks are lending. Consumer loans at US banks increased 8% to more than $860 billion in 2008. Banks would like to lend more. That’s what they’re in business for. One reason they aren’t, is that the United States is in a liquidity trap.
“A liquidity trap occurs when a country’s nominal interest rate has been lowered nearly or equal to zero to avoid a recession, but the liquidity in the market created by these low interest rates does not stimulate the economy. In these situations, borrowers prefer to keep assets in short-term cash bank accounts rather than making long-term investments. This makes a recession even more severe.”
From: Wikipedia: The Free Encyclopedia
When the economy stumbles, the Fed lowers interest rates in order to stimulate spending. Very low rates of interest make borrowing cheap. They also make savings unrewarding. Normally, the combination is enough to kick start the economy. But 2009 isn’t normally.
Question: Who in their right mind would put $1,000 in the bank just to earn $5 a year? Answer: Someone who put $2,000 in the stock market a year ago and now has $1,000 left.
A liquidity trap is born when enough people decide to protect principal, no matter how little it earns. Once the trap is sprung, low interest rates lose their power to revitalize the economy. Fear of the future trumps the willingness to take risk.
In our economy, the trap has an added barb. Over the last few decades, the demand for consumer credit expanded exponentially. Banks had nowhere near enough money to meet the need. The result was the invention of loan securitization, which is the sale, aggregation, and re-division of loans into bonds that are sold to all sorts of investors all around the world. Unfortunately, these investors no longer have the risk appetite to buy pools of securitized loans, except those guaranteed by the Federal government. They too have fallen into the liquidity trap.
It takes a long time to build a liquidity trap. It will take a long to climb out. But, with “imagination joined to common purpose and necessity to courage,” we will get out.
Tags: community development, economic predictors, financial crisis, green banking, ShoreBank, triple bottom line
Posted in Banking Industry | No Comments »
Tuesday, January 20th, 2009
Inauguration Day 2009 brings more than just a new president. It brings a turning point in the way our society approaches community development.
Most political scientists agree that President Obama’s outside-of-the-box campaign strategy incorporating social media elements was one of the things that forged his path to the presidency. As ShoreBank Online Channel Manager, I felt honored that a blogger recently compared Obama’s nontraditional strategy to that of ShoreBank’s. She blogged that Obama should create a committee of cutting edge practitioners, including “someone from ShoreBank in Chicago,” in order to realize his promise of change.
Ironically, it was ShoreBank’s commitment to providing customers with “good, old-fashioned banking” that inspired us to enter the social media space. In Friday’s blog entry, my colleague Karen recently discussed how online banking’s ability to broaden the way we at ShoreBank can connect with people does create a community. It is through the community of social media that you can help to positively impact your online and offline community.
I believe that one of social media’s core functionalities is to connect users to determine the importance of topics. Commenting on a blog, Digging an article, linking to a website, and joining a Facebook Group or Fan Page promulgates the causes you think are important across the web as it stimulates reactions. This ongoing electronic conversation can make a serious impact in the real world.
Online networks can help find people emergency housing, enable microdonations to causes, bring real-time awareness to international human rights violations, or elect a president. Creating internet connection and communication between those who share your beliefs can galvanize you to move from online communities to coordinating offline change.
President Obama changed the face of American presidential campaigning with his historic use of social media (a Facebook Page, multiple MySpace Pages, mobile text updates). However, he used these new technologies to advance traditional American political themes of optimism, service, and the need for change. ShoreBank’s social media (a Facebook page, blog, websites, and more) likewise aims to use new technologies to connect our customers to what our cofounder Ron Grzywinski calls “good, old-fashioned banking -” a tradition that builds communities, allows families to create wealth, and creates neighborhoods where people choose to live, work, and play.
Now it’s your turn. Tell us: how can ShoreBank better use social media to help you to generate change?
Tags: community development, green banking, microdonations, ShoreBank Direct, social media, triple bottom line
Posted in Outreach | No Comments »
Friday, January 16th, 2009
35 years ago ShoreBank was founded on the South Side of Chicago to provide people unfairly denied credit with access to financial resources and information. And next week a new President with be sworn in – one who started his career in the same areas ShoreBank has been active.
ShoreBank has always been committed building sustainable communities That mission continues today as ShoreBank is one of the nation’s only triple bottom line financial institutions.
Communities, of course, change . As Joel, our manager of triple bottom line innovations, noted in an earlier post, all he has to do is look out his window to see the transformation that has taken place in the local community – other banks have appeared on many street corners. But not just the neighborhoods have changed – the way people want to bank is also evolving too.
When I speak at events here in Chicago I often meet people who are very interested in the way ShoreBank does banking. And they want to invest in this work. They love the stories of local entrepreneurs creating green collar jobs , green businesses, and of homeowners making energy efficient improvements – and they love that we work with borrowers in-person. But like people across the nation they want to manage their savings from a computer at home. And on a freezing day like today I am definitely in this camp.
Banking online is part of “green banking” and it supports our mission to preserve scarce resources and leave as small an environmental footprint as possible. We provide statements electronically instead of in the mail and we don’t need to build extra branches to serve our customers. But how do we create a sense of community when, increasingly, we like to bank alone?
We saw this same challenge in politics this year as now President-elect Obama found a way to engage people using technology – but he still met with countless individuals face to face. We too are working to broaden the ways we connect with the community of people interested in supporting our traditional personal, one-on-one lending. So our online presence is changing. You have already seen some of these initiatives; in fact, you may have opened an Online High Yield Savings Account because of them. We have created a website with stories and videos of our customers and we have included features that make it easy to share items that interest you. We launched this blog and welcome your comments. We hope these stories and information are useful, so please share with us your comments and what other features and subjects you would like covered here too And don’t forget to visit our new Facebook page (Admittedly it is not as well known as the Obama page). This is all relatively new for us and somewhat unusual for a bank.
Even with these new electronic channels, ShoreBank continues to partner with borrowers with traditional personal, one-on-one service. Our ability to be a part of the community – working with potential borrowers, understanding their stores and finding them the best product for long term success – is, and will always be at the heart of what we do.
But in a world were my friend’s three month old daughter already has an email account we know online capabilities will be a significant part of the our future. We look forward to building community in this space too.
Tags: community development, green banking, high yield savings, ShoreBank Direct, social media, socially responsible investing, triple bottom line
Posted in Community | 2 Comments »
Tuesday, January 13th, 2009
Definitions of winter weather differ throughout our country. I cannot help but be jealous of my San Franciscan friends’ 70 degree weather forecast as I bundle up to face my Chicago 10 degree (and falling!) weather. The chill of my first Chicago winter has driven my poor San Franciscan self to uncover as many alternative heating solutions as possible. Luckily, because I work at ShoreBank, my search for warming methods was short-lived. A science officer at ShoreBank’s sister company, ShoreBank Pacific, had already assembled the following list of winterization tips that will both warm and reduce monthly heating bill costs for almost everybody, regardless of their definition of winter weather.
Winterize You & Your Home
• Dress in comfortable layers instead of turning up your thermostat
• Put up storm doors and windows
• Seal air links to minimize drafts
• Winterize AC and water lines
• Check, clean, and replace filters on air intakes and furnaces
• Clean gutters and downspouts. Make sure that water is directed away from the foundation.
Plan to Warm Your Future Winters
• Tune-up your heating system
• Install a smart programmable thermostat
• Replace old windows and doors with highly efficient units
• Check your furnace’s age to see if it is time to invest in a new highly efficient one
• Boost insulation in floors, ceilings, and walls as much as there is space for (20% above code is a good goal)
• Use durable materials when replacing roofs and siding. This will reduce maintenance costs over several decades
This week, I shall implement operation ‘dress in layers’ and ‘seal my drafty windows.’ What will you implement?
Tags: community development, energy efficiency, green banking, ShoreBank, triple bottom line, weatherization
Posted in Green Collar | No Comments »
Monday, January 12th, 2009
Although it’s terribly cliché to do so, given that change in the air and the fact that uncertainty clouds any economic prognostication, I will take this opportunity to offer a few predictions for 2009. I must admit, however, that as a Cubs fan, my DNA is programmed for eternal optimism:
1. The acronym PPA (Power Purchase Agreement) will become common parlance throughout the country, not just on the coasts. With President-elect Obama pronouncing the doubling of alternate energy a central goal of his administration and financing for any project still difficult to obtain under nearly any circumstance, specialty financial vehicles such as the PPA will be the preferred mechanism for getting solar projects off the ground.
2. Within the green building industry, interest in existing buildings will take precedence over the previous focus on new construction. As new projects have trouble getting off the ground, more attention will be paid to making our existing homes, offices and community facilities more efficient and environmentally sound.
3. This focus on existing buildings will lead to a fundamental shift in how we evaluate “green” buildings. We will no longer look to LEED Platinum as the preeminent standard, but instead to specific gains in energy and water efficiency. We can only hope that in 2009, when homeowners are asked about their HERS rating, there will no longer will be that awkwardness reminiscent of high school days gone by.
4. Because overall construction levels will fall significantly, green building’s share of total construction activity will exceed 10% – the level projected by many to be reached in 2010.
5. Interest in energy/water efficiency and sustainable practices may finally catch on with the general public, altering even kitchen and bath remodeling decisions.
6. The US will finally come to grips with its most pressing construction problem – the fact that construction practices are evaluated almost entirely on completion metrics (“on-time” and “on-budget”) and only rarely on performance metrics. Indeed, by far the most common concern raised by small contactors about green practices is not their lack of “expertise” in this area. It is the fact that their work is evaluated against design, product and performance specifications. Until we realize that we have never truly evaluated the performance of most contractors, we will not see significant reductions in energy consumption, nor I believe, come up with a pragmatic mechanism for promoting green collar job opportunities for smaller, under-capitalized firms that must now “guarantee” performance over the long term.
Tags: community development, green banking, green building, green jobs, power purchase agreement, ShoreBank, triple bottom line
Posted in Green Collar | No Comments »
Friday, January 9th, 2009
Ethnographers like to study those few remaining peoples so deeply ensconced in the vast Amazonian rain forests that their lives still resemble our hunter-gatherer ancestors. Some of these groups are so primitive that they only have three counting words: one, two, and many. The financial debacle of 2008 may have us all yearning for such simplicity. Instead, we are being subjected to a grisly post-mortem as statisticians and economists count the cost.
My vote for most gruesome statistic is the world-wide loss of market capitalization of all publicly-traded corporations. (Market capitalization is a company’s net worth calculated by multiplying the number of its shares outstanding in the markets by the price per share. For example, if a company has 200,000 shares of stock outstanding with a stock price of $30, the company’s market capitalization is $6 million.) On October 31, 2007, the total value of publicly-traded companies around the world was $62.6 trillion. By December 31, 2008, their value had fallen nearly in half to $31.7 trillion. The difference, $30.9 trillion, is approximately the annual Gross Domestic Product of the United States, Western Europe, and Japan combined. (Gross Domestic Product of GDP is the total market value of all the goods and services produced within the borders of a nation during a specified period.)
I don’t know about you, but I can’t count to a trillion. For me, a trillion is the equivalent of the Amazonian “many;” it’s just too big a number to grasp in any real-world way. So, what does it mean to lose $30.9 trillion? In one sense, it’s frightening real and exact. The market capitalization of a stock (or a market or all markets) at any given moment can be calculated down to the penny. But that does not mean in practice that all the investors in the stock (or the market or all markets) could, at that moment, turn that value into cash. One investor could; two investors could; but if many investors started to sell that value would very quickly deteriorate. That’s essentially what happened to the US stock market on October 19, 1987, when the Dow Jones Industrial Average lost 22.6% of its value. To this day, nobody really knows why the market fell so hard and so fast. The best explanation is simply that there were more sellers than buyers.
It took the Dow about a year to recover the losses of October 19 and about two years to top the record high it reached in August 1987. With some luck, the worldwide stock markets will recover this time too, although probably not so quickly. In the meantime, have fun amazing your friends and neighbors with that $30 trillion stat.
Tags: community development, economic predictors, financial crisis, green banking, ShoreBank, triple bottom line
Posted in Banking Industry | 1 Comment »
Tuesday, January 6th, 2009
Happy New Year! For those of you undecided on your New Year’s resolution, you might consider one that will help to change the world in 2009. The homeless and “at-risk” population is greater than ever. Nonprofits, which often depend upon decreasingly wealthy corporations and philanthropists, find themselves supporting this unprecedented demand with an ever-decreasing coin coffer. Even if you cannot give huge sums of money to your favorite cause, you can still make a difference by contributing your spare change. Small donations, one donation at a time adds up and can play a large role in transforming peoples’ lives and building stronger communities. That is why in 2009, I am pledging to help change the world by becoming a social microfunder.
Social MicroFunding is the process of using social media websites, such as Facebook, MySpace, and Twitter, to make very small donations (starting at a penny). According to Leslie Poston, founder of Uptown Uncorked, “the power of social media has never been about solely about the conversation. . . Instead the power of social media is the ability to make genuine and valuable connections between businesses or people in a matter of moments.” You generate actual capital for your cause, simply by adding it to your social capital (i.e. befriending it on a social media site).
Consider these features of Social Microfunding:
• Low Personal Cost. The average micofunding donation range is from $0.25 to $4.50. That amount is less than a cup of coffee. You can skip the barista stand one-day a week and dontate the savings.
• Speed. It is quicker to donate then it is to brew a cup o coffee.
• Easy to Generate Greater Awareness. Click ‘Share with a Friend’ on Facebook or ‘Tweet it’ on Twitter to easily garner support for your favorite causes from across your degrees of separation.
• The “peace of mind” that derives from most social microfunding sites that use only trusted e-payment sites, such as PayPal, to collect your donation.
• Real Time Impact Evaluation. Most applications provide real-time funding updates so a donor can immediately see the impact of their microdonation.
The impact of Social Microfunding is truly astounding. In only two days time, Social MicroFunding raised $10,000 for a Tanzanian classroom and over a little longer period of time $2,200 was raised for the Salvation Army and $3,500 ws raised for Charity: Water. To learn more, please click here.
As somebody once told me when I said I could not give that much, “if everybody gave ‘not that much,’ imagine how much a cause could receive.” So let us resolve in 2009 to become a family of social microfunders.
Tags: community development, green banking, ShoreBank Direct, social media, socially responsible investing, triple bottom line
Posted in Outreach | 2 Comments »
