Arizonans for a New Economy will present the Top 10 Ways Public Banking Can Boost Arizona’s Economy today– March 1– at the Unitarian Universalist Church of Green Valley in Amado.
The talk will follow the regular service, which begins at 10 a.m. The public banking presentation and discussion will be around 11:30 a.m.
We are excited for the opportunity to speak in Southern Arizona. Wall Street banks have been closing branches and eliminating accounts growers along the border. This parallels how the Bank of North Dakota got its start in 1919. Wall Street banks were foreclosing on the farms, and the farmers banded together to fight back.
From the Nogales International…
On Feb. 10, Sens. John McCain and Jeff Flake, both Arizona Republicans, called for a hearing before the Senate Committee on Banking, Housing and Urban Affairs to examine the banks’ pullout from states bordering Mexico. More locally, a Nogales delegation spoke at the Arizona Senate’s Financial Institutions Committee on Feb. 4.
The senators’ request came after several large banks reduced or eliminated their branches in Nogales and elsewhere along the border in recent years. In Nogales, Banamex USA, a subsidiary of Citigroup, closed its branch, while JP Morgan Chase closed one of its branches, and Bank of America pulled out entirely. In addition, Chase closed about 2,500 commercial accounts in Mexico in 2013.
Owners of cash-intensive businesses have expressed “serious concern” about the bank closures, McCain and Flake wrote to the senate committee on Feb. 10, citing “burdensome regulatory compliance costs and the potentially indiscriminate application of anti-money laundering regulations”…
At the Feb. 4 hearing in the Arizona Senate, Sabrina Hallman, president of Nogales-based Sierra Seed Co., said she has to change banks every 18 months because banks do not want to deal with the Mexican side of her business.
However, growers in Mexico must be invoiced in Mexico due to tax requirements, just as U.S. companies have to do north of the border, she said.
“We’re not money laundering,” Hallman said. “We’re moving money across the border every single day so my growers can get their seeds and their goods and pay their taxes as they’re responsible for, that produce gets back across this border, that my seed gets paid for, and we all get to each fresh fruits and vegetables year round across the country.
“I’m just dancing every single day,” she said, noting she has tried banking with U.S. and Mexican banks, as well as with the Bank of Portugal.
“If we continue to operate in a manner that says border is bad, we are just going to shoot ourselves in the foot economically,” Hallman said.
Bruce Bracker, chairman of the Greater Nogales Santa Cruz County Port Authority, told the committee members “the big banks are abandoning our communities.”
Rather than deal with higher standards for monitoring and compliance, banks are closing accounts with local businesses, he said.
“They will provide services only – and I stress only – if you are a big business doing business with a big bank,” Bracker said, calling the practice “discriminatory under the lending practices of the United States.”
The nightmare scenario for banks came in 2012 when HSBC was fined $1.9 billion for allegedly allowing Mexican and Colombian drug cartels to launder $881 million from 2006 to 2010, made possible by the bank’s “blatant failure to implement anti-money laundering controls,” according to a press release from the U.S. Department of Justice.
At the state Senate hearing, Duane Froeschle, president of Western Alliance Bank, said the banking industry has a “strong commitment” to comply with anti-money laundering regulations.
However, “know-your-customer” requirements have evolved into “know-your-customer’s-customer,” he said, which raises the banks’ costs.
Since the Great Recession began, federal regulators have “intensified” their monitoring of banks and compliance costs likely will continue to rise, he said, noting regulators often both fine and issue cease-and desist orders that limit a bank’s ability to grow.
Froeschle noted federal regulators are “a little bit farther from the street, and have a little bit less attention perhaps to the unintended consequences that fall out of the very real need to enforce AML (anti-money laundering).”
One thought on “Amado UU Church Forum: Public Banking on the Border, March 1”
Thanks for sharing that information about banking on the border. I had no idea of the banking issues for businesses on both sides…It’s good to know what they’re dealing with and how a state-owned AZ bank could improve the situation.