I chose today's topic for a couple reasons. First, today is called Black Friday because it's the day that most determines whether retail businesses will finish the year "in the black"--that is, out of debt and making a profit--so the topic of money changing hands is appropriate. Second, somewhere in America today, it's a good bet someone will be watching "It's a Wonderful Life"--a great Christmas story, but also a story about banks.
So let's start by looking at Norristown's banking history.
For much of the borough's history there were 2 kinds of retail banks in town: National Banks, chartered under the Federal government, members of the Federal Reserve System; and Community Banks, which takes the funds of people who have savings accounts and invests in the community by giving loans to local businesses and developers. Savings and Loans (or Building and Loans as they were sometimes called) were similar to community banks, but their loans were mostly mortgages.
Up through the first years of the 1980s, I remember N-town having as
many as 8 banks within its borders. 4 of them were downtown on Main
Street. Savings accounts regularly earned around 5% interest.
deregulation happened in the 1980s. Big national banks began buying out
community banks and each other to create huge financial
mega-corporations. Yes, just like the evil Mr. Potter trying to take
over Bailey Building and Loan in "It's a Wonderful Life." There are still a
few community banks around now, like Penn Liberty, based in Wayne, but
they're endangered species.
Many developers who build in
Norristown have found other sources of funding--direct taxpayer
dollars--which they get from the state, county and borough. They raise
some money through investors, but if you've ever been to Council
meetings where one of them is seeking approval for a project, you more than likely heard words similar to "Sure, I can make the changes to the design
you want, but I need another $150,000." I just heard one of these
developers bragging about how Council will jump through hoops for her.
Yes, we get a few more homeowners from some of these projects who then pay
property taxes, but it takes at least a decade to get any real return on
our investment and the projects haven't raised property values. When she
comes back with another project, does she invest the profits from the
last one? No, she asks for more public funding.
On the bright
side, some of this public money is now available as small business
loans. Some new ideas for financing our local businesses are being
explored, like crowdfunding. But you can see how the evolution of the
banking industry in the last 30 years has been a major factor in the
economic downhill slide of Norristown and lots of other working class
communities across the U.S. We need to come up with a lot more creative
ways to keep money from being sucked out of our community.