Banks Use Your Deposits To Loan Money To Fossil-Fuel, Emissions-Heavy Firms (arstechnica.com) 101
Banks lend your deposits to carbon-heavy industries, fueling climate change; savings of $1,000 create emissions equal to a New York-Seattle flight, reveals a new analysis. Wired: By switching to a climate-conscious bank, you could reduce those emissions by about 75 percent, the study found. In fact, if you moved $8,000 dollars -- the median balance for US customers -- the reduction in your indirect emissions would be twice that of the direct emissions you'd avoid if you switched to a vegetarian diet. [...] The new report finds that on average, 11 of the largest US banks lend 19.4 percent of their portfolios to carbon-intensive industries. To be very clear: Oil, gas, and coal companies wouldn't be able to keep producing these fuels -- when humanity needs to be reducing carbon emissions dramatically and rapidly -- without these loans. New fossil fuel projects aren't simply fleeting endeavors, but will operate for years, locking in a certain amount of emissions going forward.
So? (Score:5, Funny)
So? That's good.
Re: (Score:3)
So? That's good.
It would be an interesting experiment to see how a bank operating on environmental and left-wing political policies fared. Or even a Credit Union for that matter. There are plenty of green and lefty billionaires and millionaires. Some of them work on Wall Street and even operate hedge funds. Get them to put down the seed money for an institution that requires adherence to membership principles, so you've got things like checking and savings and mortgage lending for common members, but then an investment str
Re: (Score:2)
Why not? That's where the big money is.
Re: (Score:3)
Re: (Score:2)
Re: (Score:3)
Re: (Score:2)
No gas companies, no military contractors, etc etc.
Why not? That's where the big money is.
Because the point of the experiment would be to see if politically-based banking works. There are various calls for disinvestment in this and that. OK, so, use a financial institution that doesn't invest in those things you don't like. That only invests in the things and causes you support. Let's see if such a model is actually viable. I think with enough dedicated members using those services it could be, if they were willing, on principle, to pay some higher prices for certain services. There are definite
Re: So? (Score:2)
You'd likely 'enjoy' lower returns on your deposits/investments, since if such green investing were more profitable, banks would already be doing it (they're not stupid, they're just very, very focused on profits).
That banks aren't currently doing this tells me it is less profitable.
Re: (Score:3, Interesting)
I bank with USAA Federal Savings Bank and Navy Federal Credit Union. I certainly HOPE that they're investing my money in fossil fuel and military businesses.
Re: (Score:2, Informative)
It would be an interesting experiment to see how a bank operating on environmental and left-wing political policies fared.
It has already been tried and has completely failed every time. Also, people have tried investing only in "green" companies but it yields significantly lower returns.
There are plenty of green and lefty billionaires and millionaires.
And **NONE** of them became billionaires by investing in "green" businesses.
Re: (Score:2)
Re: (Score:3)
They already exist, as a simple Google search would have shown you. Some are relatively new. Some have been around for quite a while.
Re: (Score:3)
They already exist, as a simple Google search would have shown you. Some are relatively new. Some have been around for quite a while.
They exist on mostly small scales, or are tied to a specific organization. Amalgamated Bank, for example, is specifically to serve Unions and Union agendas. It's limited in scope. Beneficial and Sunrise Banks, are small, local banks without a lot of capital (on a national scale). I'm talking about a big, national-scale bank/CU operating on leftist political principles. A progressive Capital One, if you will. Well funded, widely available coast to coast, operating on a set of political principles. That is wh
Re: So? (Score:2)
Who headed up Silicon Valley Bank, you know, before it imploded due to some novel ideas they had about investing in very low long-term bonds?
Re: So? (Score:5, Insightful)
A single bank can make money this way because the other people's money it sloshes around would be subsidized by the rest of the economy. Just like my little town can preen about buying green electricity while the grid gets propped up by gas burning plants, and my neighbors can show off their teslas and rivians but have their driveways plowed by diesel trucks and their home repairs done by guys who show up 20yo f150s.
The problem of ideologically motivated central planning isn't that a one-off is infeasible. It's that it won't work if everyone tries to do it at the same time. This is called the fallacy of composition. If I stand up in theater to get a better view, it does not follow that everyone will get a better view if everyone stands up.
Re: (Score:3)
This is a common fallacy. If you buy only renewable energy, it doesn't mean someone else gets fossil energy to make up for it, or that a fossil plant works harder to "prop up the grid". It means that more money goes into developing even more renewable energy.
The UK just had a record breaking day of wind power. The grid didn't collapse or become unstable. Fossil fuels were directly displaced. Energy was cheap for everyone.
Re: So? (Score:2)
Energy was cheap for the windmill operators. Consumers still paid the same rate.
Re: (Score:2)
People on some tariffs didn't, e.g. Octopus has some that can go as low as free when energy prices are low.
Re: So? (Score:2)
And when the wind doesn't blow while the sun isn't shining? The system still needs to handle that. Meaning you need nuclear, gas, or even coal to add up to the full demand, even if you offset some of it with wind or solar some of the time. This means you need to pay for those plants that could run your grid by themselves *and* you need to pay for the wind turbines.
Unless your turbines and solar panels are practically free to install and maintain for their useful life (or at least cheaper than the cost of fu
Re: (Score:2)
We will probably need some gas standby for some years yet, but 95% renewable is not difficult. We are already well past the joint where the wind never stops blowing for the entire fleet.
Re:So? (Score:5, Informative)
It would be an interesting experiment to see how a bank operating on environmental and left-wing political policies fared.
It's already been done.
There are many "green" and ESG investment funds.
The answer is ... some do better, some do worse, and they all fluctuate.
One advantage is they go up on bad news about the climate and rising oil prices while the market as a whole goes down. So they are a good bet for pessimists and contrarians.
Here are two stories. Take your pick:
Yes, investing in ESG pays off [hbr.org]
Green investing is underperforming [cnbc.com]
Re: (Score:2)
It's a time honored tradition amongst certain types of people to say one thing, while doing another (all the while scolding the hoipolloi for it). It's rather a bit like pushing for open borders elsewhere, but instituting virtual apartheid at home.
But on balance, those green initiatives tend to lose money without government subsidies and favorable regulations (which is a totally different conversation)
Re: (Score:2)
socially conscious banks (Score:1)
Banks loan to businesses? (Score:5, Insightful)
News flash!
They loan to all sorts of businesses even pornohub. Or churches. Or cake bakers. Get a grip and stop trying to tie your morals to others to enforce for you. It would be unethical for banks to discriminate
Re:Banks loan to businesses? (Score:4, Informative)
This article is just a newsvertisement for some woke "green" bank or some shit. Bunch of green grifters.
Re: (Score:2)
This article is just a newsvertisement for some woke "green" bank or some shit. Bunch of green grifters.
Speaking of grifters, there's that "anti-woke" attempt at a bank which failed after three months [fortune.com].
Re: (Score:3, Insightful)
They were just grifters as well, on the other side of the coin. Banks should be founded for financial reasons, not political ones.
Re: Banks loan to businesses? (Score:1)
Beyond that, it's just a stupid way to approach the problem. Trying to lower the value of those assets by shifting your money individually away from them just makes the returns all that much better for others, attracting investors that give no shits (most investors). If the profitability of the ventures remains the same all you've done is make the climate conscious people poorer by funneling the best returns to people more concerned with returns. And since money is power, you are in effect making yourself l
Re: (Score:2)
News flash!
They loan to all sorts of businesses even pornohub. Or churches. Or cake bakers. Get a grip and stop trying to tie your morals to others to enforce for you. It would be unethical for banks to discriminate
Afaik all major banks have "discriminatory" policies wrt lending (links to the three largest US banks):
https://www.jpmorganchase.com/... [jpmorganchase.com]
https://about.bankofamerica.co... [bankofamerica.com]
https://www.citigroup.com/glob... [citigroup.com]
Could you name one that doesn't?
Re: (Score:2)
That kind of "discrimination' is common in Europe. Not just banks, a lot of business tenders now include consideration of environmental factors. It would be unethical to ignore those issues.
and to everyone else... (Score:2, Insightful)
Re: (Score:3)
Re:and to everyone else... (Score:5, Insightful)
LOL, you clearly have never met a "poor and starving single mother". It's next to impossible to get a loan if you're poor. Banks and bankers are not charitable, and life is not a Hallmark movie.
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
There was no whoosh there. The OP was not making a joke, and if you think they were that says more about you than the GP.
Re: (Score:2)
I believe the bread and butter of at least small credit unions is car loans, and maybe originating mortgages, which are promptly sold to Fannie or Freddie.
Re: (Score:1)
Even worse (Score:5, Funny)
Re: (Score:2)
ZOMG! (Score:5, Insightful)
ZOMG! Banks are lending money to anybody with good credit engaged in legal business. Stop the presses!
Oh, and another thing (Score:2)
They don't need bank loans. Ever heard of corporate bonds? What a bunch of dreck.
So if they can sell their own bonds, why do they use the banks in the first place? Because they might be able to get better rates at times; but it's not make-or-break. They could be turned away by every bank in the USA (not going to happen, just a hypothetical) and either charter their own bank, use foreign banks, or rely totally on corporate bonds as above.
It would be a footnote on their quarterly report: "all the banks b
Re: (Score:2)
They don't need bank loans. Ever heard of corporate bonds? What a bunch of dreck.
So if they can sell their own bonds, why do they use the banks in the first place? Because they might be able to get better rates at times; but it's not make-or-break. They could be turned away by every bank in the USA (not going to happen, just a hypothetical) and either charter their own bank, use foreign banks, or rely totally on corporate bonds as above.
It would be a footnote on their quarterly report: "all the banks boycotted us, we anticipate paying an average rate next quarter of 2.03% vs. 2.01% otherwise."
While there is considerable consolidation going on in the upstream space, there are still A LOT of private companies that can't "just issue corporate bonds." So, actually, they do need banks and/or private equity capital.
Re: (Score:2)
I was thinking in terms of Fortune 500 companies, but that's a good point. Then you get down to the matter of Joe's Trucking with 30 employees not being able to get loans at the local bank or credit union. I don't see that happening--people will change their minds fast when you can't get a load of gravel delivered for local construction projects and half the town is unemployed because of stupidity like that.
Re:ZOMG! (Score:5, Insightful)
Re: (Score:1)
Neither of these things are going to change anytime soon. Why would I not want my bank to lend to companies that provide a service I consider essential?
The essential service is house heating and vehicle mobility; not the particular technology. "not to change anytime soon" is self-fulfilling prophecy if people follow your rationale. It also depends what you call "soon". Several countries are banning gas-powered cars in the near future, some others have already banned domestic oil heating systems (in new installations). It's a serious argument to fund the other technologies such that they get developed faster and reach your home or car faster at lower prices
Re: (Score:1, Troll)
And if you put $25K in my bank account I'll switch to a heat pump. O
Re: (Score:2)
Re: (Score:2)
The essential service is house heating and vehicle mobility; not the particular technology.
Nope. The essential service is what is specifically available to you at any given time. Cutting a person off from natural gas when they have a natural gas heater is the loss of an essential service. The ability for a person to spend a small fortune changing their heating system doesn't make natural gas less essential. Not everyone has a spare $20k laying around.
That goes even more so for cars since you can't get an EV for $20k simply because you lose the ability to pump petrol. Petrol is essential to you if
Re: (Score:2)
The essential service is what is specifically available to you at any given time. Cutting a person off from natural gas when they have a natural gas heater is the loss of an essential service. The ability for a person to spend a small fortune changing their heating system doesn't make natural gas less essential. Not everyone has a spare $20k laying around.
This. Converting my existing HVAC to a heat pump would cost me about $25K CAD. Leaving that 25K in my investment account should manage at least a 7% return over the long term. This means that heat pump would have to save me $1750/yr over my existing gas furnace just in the first year. And it won't.
Granted the heat pump might add some value to my home, but that value decreases over time, unlike if I invest the money where compounding interest means it actually returns more every year.
So yeah, if t
Re: (Score:2)
Cutting a person off from natural gas when they have a natural gas heater is the loss of an essential service.
What I say is while banks should invest in essential services (e.g. house heating technologies in general), it makes sense for different banks to choose different investments strategies and therefore it would not be unsurprising if some banks would choose not to invest in petrol-based energies (which was the point discussed by GP). It makes sense both in terms of customer focus ("value-based banking") and in the expectation of huge returns; since the petrol-based options are going to be banned sooner or lat
Re: (Score:2)
Because you want to stop using fossil fuels as soon as possible, and investment in clean tech brings the price down for you.
Re: (Score:2)
Because you want to stop using fossil fuels as soon as possible, and investment in clean tech brings the price down for you.
I'd mod you funny if I had not already posted :-)
Re: (Score:2)
"Intensive?" It's "intents and purposes." :|
Re:Total Bullshit Title (Score:5, Informative)
I understand where you're coming from, and while you could frame it like that, the reality is that banks add to the M1 Money Supply by incurring debt to their depositors when issuing loans. It doesn't change the M0 supply, and some of the money supplied to the loan may even have been part of the M1 supply, already. It's a complicated knot, but it actually can be unraveled if you have access to enough information.
Terrible advice. (Score:5, Insightful)
I'm inclined to deposit my money into a bank that prioritizes issuing loans to people they can expect to reliably pay them back with interest, rather than a bank which limits their lending based on arbitrary measurements. This is what happened to Silicon Valley Bank. Too many risky investments, not enough reliable investments. If you want to lose your money, deposit it in a bank that refuses to lend money to people who will pay it back.
Re: (Score:3)
Re:Terrible advice. (Score:5, Informative)
The accounts at Silicon Valley Bank were FDIC insured. The issue was that over 90% of the money held by the bank was over the $250k limit of FDIC insurance.
Re: Terrible advice. (Score:2)
Re: (Score:2)
Re: (Score:2)
You knew the limit and tou chose to go over it and not mitigate your risk through other channels.
You sound like a poor person. Only $250k in an account? If you want to suggest that this should be the max of all accounts from a purely risk mitigation point of view then you will instantly stop the world economy, since the economy doesn't run on poor people with tiny accounts.
Yeah I'm risk averse, I'll make sure I never keep more than $250k in any one bank. Now as a business I need to buy a VLCC full of crude oil, how do you think I'm going to pay the $90 million for that one delivery? 360 transactions f
Re: (Score:2)
Re: (Score:2)
Okay... so? (Score:3)
I have stock in six major banks. Make it work in my favour please. Guess what? Every commercially available food source gets to you because of fossil fuels. Boycott them.
How financing occurs isn't the problem. You want to stop the use of those fuels? Get close to consumption. Oh, you don't want to pay $3 for a tomato? No problem. Move the attack upstream where it's ineffectual and you can pretend somebody else is failing.
Do these loans get paid back with interest? (Score:2)
Yes?
Good.
S! E! G! (Score:1)
S!
Give me an E!
E!
Give me a G!
G!
S! E! G!
credit unions (Score:2)
I belong to a credit union for this and other reasons. Problem solved.
Clutching my pearls rn (Score:2)
Oh heavens! My bank invests in conventional global industry? Whatever shall I do?
Seriously guys. If we're trying to put fossils out of business, it ain't happening through the banks. We're going to innovate, build infrastructure, and conserve our way out of that problem.
Oh! and guess f-ing what? Energy companies are investing in new energy, as well as continuing with fossils. Big oil is also going to be Big renewables, and they are in the best position to do so, so best not to kill the golden geese, eh?
And water is wet (Score:1)
What Dicks (Score:2)
Collateralized Debt (Score:2)
Banks buy bundles of loans. Yield and term are all that matter most of the time.
It's possible to have a back room full of analysts who review the prospectus of every offering and flag all the "undesirable" investments. But that's going to cost someone money. Either the bank or an ESG fund doing the research. And since low cost, low fee funds tend to do better they tend to pull ahead of the higher cost ones.
Now watch the beneficiaries of organizations like CalPERS sit and obsess over the fractions of perce
Good! Energy sources need to be diversified! (Score:2)
Re: (Score:2)
Re: (Score:2)
I expect more PHEV options to come to market, and be quite popular, for the reasons the parent and grandparent comments describe.
This isn't a choice between ICEV and BEV, there's a third option of PHEV. I know that there are haters that will claim a PHEV will only be extra cost and complexity but the people that know how to build a proper PHEV can get to something cheaper and simpler than a traditional ICEV. Why aren't there more PHEVs then? Well, for one there's a nontrivial problem of designing these t
They also loan money to tech companies. (Score:1)
And I care why? (Score:1)
Re: (Score:3)
Humanity needs oil and gas. Our entire civilization requires diesel fuel for us to not live like it is 1700. Maybe someday the electrification dream will be real, but I personally think we are at least several human generations away from that being near real.
I recall it was last summer I watched an interview on YouTube where the host and guest laid it out how vital it is to keep diesel engines running. While the material was fascinating the interview was a mess, the guest took a half hour to get to the point and still left out important details that I had to look up elsewhere to fill in the blanks. While the interview was a mess, so bad I won't link to it so as to spare others the pain, it shows that there is a growing realization on this being a problem.
Litt
Where does this stop? (Score:3, Interesting)
The Biden White House says investment in American fossil fuels lowers CO2 emissions. Do you want me to stop investing in what is lowering CO2 emissions?
https://news.slashdot.org/stor... [slashdot.org]
The world runs on diesel engines. Every Tesla gets to the end user on the back of a diesel truck. All the parts brought in to Tesla come on diesel trucks. Do we not invest in Tesla because they buy diesel fuel for their trucks?
Maybe we say Tesla is fine because of some BS about CO2 offsets or something. Then what of the people making the steel, aluminum, and so on for Tesla? Tesla needs these materials and if there's no investment in the diesel trucks, trains, and ships that move the raw ore, refined material, and then the sheet metal and such to Tesla then there's no Tesla cars produced.
If people want to see any real change then we need to stop punishing bad behavior and rewarding good behavior. The problem is that good behavior, like building nuclear power plants, has also been punished. Producing carbon neutral liquid fuels has also been punished, or at least discouraged, by plans to phase out internal combustion engines. Who is going to invest in carbon neutral fuels if the government has stated that the largest market for this fuel will disappear in 12, 20, or how many ever years?
We need more options, not fewer. What we are seeing are people focused on narrower and narrower solutions when there's not much evidence in them being profitable. Offshore wind is very expensive right now, and because work out at sea on a floating platform is inherently difficult and dangerous this is not likely to change. Rooftop solar is expensive, and because it is inherently spread out, small scale, and elevated above grade, there will be an inherent high cost from the added time and labor involved. Batteries are not an energy source, they are inherently an energy sink because there is energy lost in conversion.
What produces energy that is low in CO2 emissions, low in land use, low in material costs, low in labor costs, safe, and high in reliability? Nuclear fission. Will these banks invest in that? I have my doubts. Will the Biden White House allow for more nuclear power plants to get built? Given that they had many years to make that happen and have not done so yet I have my doubts that will change either. What the Biden White House has done is try to spin their support for keeping diesel trucks moving in the USA into some kind of CO2 reduction effort. They'd be far more effective in lowering CO2 emissions with support for nuclear fission and synthesized hydrocarbon fuels. The nations that live outside of this nonsense are building nuclear power plants, and in the case of China doing so by the dozens. Why? Because once the BS is removed from the process nuclear fission is a very profitable means to produce energy. China might not have the same kinds of motivations on public safety but the people in charge aren't likely to do anything they know will create another Chernobyl or bankrupt their economy, there's no more fine wine and cigars in a nation that is a radioactive wasteland. They are going to do what is profitable and safe. In the USA we have had the luxury to fart about with wind and solar, ignoring nuclear fission, because the diesel fuel is still flowing. Cut off the flow diesel fuel and we will find out just how well that farting about has done in producing energy.
Fart about, find out. We keep finding out what happens from farting about. At some point reality is going to set in. Go ahead, keep finding out. When you are done farting about then maybe will get some real solutions.
They do? COOOOOOOL! (Score:1)
Seriously.
The purpose of the bank is to make interest on the funds I leave with them.
It's not there to burn my money while lecturing me how I SHOULD be living.
If someone doesn't understand this, they're brain-damaged.
From the "No shit, Sherlock" department. (Score:2)
Banks only receive your deposits so they can loan them back out at a higher interest rate than they're paying you.
Remember kids ... (Score:2)
...not one corner of life can be allowed to escape politics!
We can't have decent totalitarianism without being total! Sheesh, you people ...
8000 double dollars? (Score:1)
..if you moved $8,000 dollars...
I have never understood how I'm supposed to know how to convert from double dollars to USD.
Ok... (Score:2)
No (Score:2)
Moving your money will not save a single gram of emissions. These projects will get funded, the fact that your cash in your bank isn't doing it is completely irrelevant.
This is the definition of virtue signalling. You achieve nothing.
Cry me a river (Score:2)
This entire "article" sounds like it's written by a young adult who only just understood how banks work and they are free to allocate their capital as they see fit to ensure solvency and profit, and now the author is highly shocked and offended and decided to go out into the depths of the Internet and unleash their sorrows onto the world. Little value, lots of crying. Pointless piece of news.