Sunnyvale, California Since 1994
Opinion
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Investing money ... the 'old-fashioned' way
Banks offering advice with financial affairs, but help for whom? 
By Carl Heintze The other day I went into my bank to make a deposit. The teller, who looked to be a good 50 years younger than me, stamped my check and glanced at his computer. "You've got a lot of money in your account," he said. "I hope so," I said. "I put it there." "Don't you want help in investing it?" he said. "No," I said. "What I do with my money is my business." But, of course, it isn't. The bank thinks it is its business and they don't like it because business isn't booming. My bank isn't really a bank in the traditional sense of the word. It's a retreaded building and loan. Over the dozens of years I've put my money in it, it has changed its names at least a half-dozen times, and it's about to change it again—the result of yet another of the seemingly endless mergers that are the mania of American banking institutions. Over the years the bank has gone through a series of other changes, too. It used to be what's called a savings and loan. Savings and loans were set up in the last century to make it possible for depositors to borrow money with which to build homes. Then, as times improved, the S&L's, as they were called, had more and more money with which to work. Unfettered by much regulation, they ventured off into all kinds of strange schemes and eventually produced the debacle of the last century—the S&L crisis. S&Ls dabbled in investments that weren't really. Some were simply looted of their cash by crooks. Still others threw money around as if it were, well, money. After a while reality set in, and so did trouble. Because their deposits were federally insured, the federal government had to bail out the S&L's about to go bankrupt, close some and merge others. We had the great S&L scandal. Eventually, most of the nefarious practices of S&L bankers like Charles Keating got straightened out. Some of the bad managers, like Keating, spent time in prison, but, in the end, depositors' deposits were safe. But there was a residual effect of all this. The S&L's liked being like banks. They liked to invest their depositorsŐ money because that made them money, too. And, like all corporations in a capitalist society, they found that merging made sense. Merging two banks into one cut down on the number of branches one had to keep open, reduced the number of employees one had to pay and increased the amount of money available to the owners of the former S&L's. Where once it was possible to have accounts in several banks, now there were only three, then two and, who knows, there may one day be only one. Keeping track of this merger mania isn't easy. It also has removed the former feeling that you could deal with an individual banker, a kind of neighborhood money store. The number of branches has grown consistently fewer, the tellers—who don't get paid much—come and go with great rapidity, and the banks' owners keep trying to find new ways to use deposits to their advantage. All banks now have "investment counselors" of one sort or another, folks who would love to tell you (and me) not to just let your money lie there in a certificate of deposit. Instead, they'd like to talk you into a half-dozen schemes to get a greater return on your money: equity funds, mutual funds, single pay life insurance—most anything in which the bank (and supposedly you) will get a cut of the action. No matter that the stock market is in the doldrums, that most investors are alarmed at the likes of Enron and Arthur Andersen, and that the dot-com revolution has ended—the former S&Ls still see a silver lining in those clouds of gloom on the economic hills. And so my teller friend, obviously on the instructions of someone higher up in the bank, thinks I have too much money just lying there and tells me I ought to talk to the local investment counselor. Thanks a lot, pal, but no thanks. I never bought any Enron stock. I'm unimpressed with any plan that's going to make me rich painlessly and without some risk on my part. Just let my money lie there, friend, preferably in a safe place. I earned it, as the saying goes, the old-fashioned way, and I'll invest it the same way, if you don't mind. And you have a good day, too. —Carl Heintze is a frequent contributor to The Sun. |
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