You can divest from the “Too Big To Fail” banks by moving your bank accounts and taking out new loans at local community banks and credit unions, but you’re not the only one doing their part. A major mutual fund has decided it will no longer invest in the nation’s biggest banks, just like it does not invest in other companies it deems dangerous and socially irresponsible. The Huffington Post reports:
- A top-ranked mutual fund will no longer invest in “Too Big To Fail” banks, announcing Thursday it would extend a prohibition already in place against tobacco firms and pornography distributors to banks like Citigroup and Goldman Sachs Group.
In its release Appleseed Fund, a self-described socially-responsible fund that was created in 2006, said that Too Big To Fail (TBTF) banks are also “too big to own.” The TBTF firms are now treated by the fund like those that “derive substantial revenues from the tobacco, alcohol, pornography, gambling, or weapons industries,” according to the fund’s filings.
It is the first mutual fund to explicitly state that it will not invest in TBTF banks, the $140 million fund said in its announcement.
The fund also refuses to invest in major tobacco and alcohol companies, but the decision to divest from Wall Street was motivated as much by the excess of greed as the inherent risks. In a statement, co-portfolio manager Adam Strauss explained: “For these banks to be as unhealthy as they are, for them to be paying out the kind of compensation that they’re paying, seems to us to be irresponsible. And, at the same time, there are risks they’re taking with their balance sheet, and if those risks go wrong the American public is on the hook for them.” Instead, the fund will invest in small and medium-sized banks and credit unions.
Want to move your investments away from the big banks? Check with your financial advisor to see what your options are and what works for your portfolio. Investing can be complicated, but there are many alternatives that are safe, healthy and financially sustainable. Explore sources like the Social Investment Forum or Social(k).
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