Black Lives Matter protesters pass through the heart of Harvard Square on June 20 – and by Cambridge Savings Bank’s home office. (Photo: Marc Levy)

For decades, we have entrusted too much of our money to a handful of really big banks that hold power over our communities without giving back, regularly practicing unethical and biased lending practices and catering disproportionately to big, not small, businesses.

In 2020, Massachusetts citizens deposited $286 billion into just three banks: Bank of America, Citizens Bank and State Street Bank. These big banks decide who among us can borrow money, but instead of reinvesting in Massachusetts, they take our money and invest it far away. This is money that is needed to grow our communities and small businesses, which are essential for creating diverse wealth, family wealth and generational wealth. Without access to money, entire communities can become trapped in poverty.

But large banks are structurally incapable of lending to small businesses, because they are not specialized in local markets and consider it too risky to lend within them. Banks such as Bank of America, Chase, Citibank and Wells Fargo mostly provide $250,000-plus loans to businesses with more than $5 million in annual revenues. This leaves out substantial numbers of small businesses such as clothing stores, architects and law firms, restaurants and wine companies.

Bigger and bigger

The 1990s saw repeals of the McFadden Act (which constrained banks in their home states) and Glass-Steagall Act (which separated commercial banking from investment banking), and large retail banks responded predictably: They opened branches across state lines, merged with investment banks and traded on stock exchanges, shifting their already bare small-business lending funds to trading. That devastated the small-business lending industry, while reckless trading helped cause the 2008 financial crisis. Yet these banks have only grown larger since.

The big banks also continue to practice unethical and biased lending practices such as redlining, in which they restrict lending in certain areas based on race. This is immoral and criminal.

We can’t continue to support these institutions with our savings accounts, checking accounts or government accounts. Yet we do. And they keep gaining power because of it.

A better way

Is there a better way to deposit our money?

Yes. Until the McFadden and Glass-Steagall Acts are reinstated, we can shift our deposits to smaller community banks and credit unions – long-standing pillars of the community that invest and lend in the cities and towns where they’re chartered, allowing families to grow financially, but often go unrecognized.

Just in Cambridge, we have three: Cambridge Savings Bank, East Cambridge Savings Bank and Cambridge Trust.

Community banks such as these have a special relationship with small businesses. They offer more than 60 percent of all small-business loans, which helps Cambridge thrive.

They were vital in helping Cambridge businesses secure Paycheck Protection Program loans during the Covid-19 crisis, helping struggling businesses stay afloat in difficult times.

Community banks also serve a special role in promoting BIPOC businesses.

Move Your Money

This month, Cambridge Local First is partnering with the Sustainable Business Network of Massachusetts and the newly formed Cambridge-Somerville Black Business Network on a monthlong Move Your Money campaign aimed at amplifying the benefits of banking locally for residents, businesses and students. The campaign will highlight the technical advantages and opportunities offered at these small banks, their positive effects on the community and their better customer service. The campaign will also show to open accounts or transfer your money to local banks.

“Cambridge Savings Bank is proud to have been a part of the Cambridge community since 1834. Our local teams at our four Cambridge branches – Harvard Square, Inman Square, Central Square and Porter Square – are looking forward to working with Cambridge small businesses as part of the Move Your Money campaign,” said Kevin Chaves, first vice president and Cambridge West regional manager at Cambridge Savings Bank.

Stand up for Cambridge by keeping your money close to home. Move your money to a credit union or community bank. The more we do, the more powerful our community banks and credit unions will become.

We’re asking you to help us spread the word about #MoveYourMoney – but to first take the step of looking up who you bank with.

Are they local?

Do they have a history of redlining and not lending to communities of color?

Do they prioritize bailing out large corporations instead of your neighborhood coffee shop?

Make the pledge to move your money and invest in Cambridge. Learn more here.

Ryan Scanlon and Theodora Skeadas represent Cambridge Local First. Several ideas in this article were inspired by Local First Arizona.