Saturday, June 13, 1998

It will take more than a free toaster

By Bob Greene

Who was the most solid citizen in the town where you grew up?

The steadiest, soberest, most dependable guy in town? The no--nonsense fellow who may not have been a ton of laughs -- but who was the firm, unshakable center of civic life?

Chances are, he was the banker -- the head of your local bank.

The bank felt a little like a church -- or at least like City Hall. In the years after the Great Depression, with deposits in America's banks guaranteed absolutely by the federal government, banks became the symbol of how the country felt about itself. Confident, prudent, averse to needless change.

All of which made the news last week all the more startling:

For the first time in U.S. history, it was reported, the total assets in mutual funds are now greater than the total assets in America's banks.

In other words, Americans appear to be placing more of their trust in the stock market than in the bank on Main Street.

Financial analysts read an implication into this: that people are so caught up in their belief that the booming stock market will make them wealthy that they are willing to risk their cash instead of letting it sit in safe, federally insured bank accounts.

As the Chicago Tribune's R.C. Longworth wrote: "The upshot is that America's nest egg is more speculative than ever before. The savings and the retirement of an unprecedented number of Americans are neither guaranteed nor insured by the government, but depend on the vagaries of a so far abundant stock market."

The figures are these: Total assets in mutual funds are $5.05 trillion. Total assets in banks are $4.95 trillion.

So Americans believe in the stock market more than they believe in banks, right? Well ... maybe.

But if that is true, it may have more to do with our new attitude toward banks than with any starry-eyed romance with Wall Street.

Because, gradually but inexorably, the image of American banks has been transformed into something quite different from what we had become accustomed to.

That bank that sat in the middle of the downtown block of your hometown has mostly likely undergone three or four name changes in the last few decades. If you've kept your money in the same bank for the last, say, 25 or 30 years, the name by which you think of the bank may not even be its current name. Chances are it is now controlled by an out-of-town company you know little or nothing about; chances are its name today is some combination of initials that don't mean a thing to you.

Your bank statement arrives one day, and you are puzzled by the return initials on the envelope -- and you open it up to find out that your money is being safeguarded by bankers about whom you have no knowledge.

Banks, all of a sudden, seem to have little to do with taking care of your money. Banks are in business to wipe each other out -- if this was always the case, at least the bankers used to be smart enough to hide it from their customers. Sober? Bland? More and more, banks have the same image as competing casinos -- flashy, full of quick come-ons, poised to make the big score before selling out. With all the continuity of itinerant scissors sharpeners.

Your money? More and more, it seems that there is no such thing as money -- just illuminated digits dancing and bouncing on computer screens. A solid center of the community? Banks have given themselves all the heft of a house of cards. In the current banking climate, the stock market seems by comparison as rooted in tradition as Old Faithful. The nation's banks have accomplished the impossible -- they have made the stock market, which is really just a place of legalized gambling, seem steady.

That's a dangerous illusion -- and the banks have no one to blame but themselves. Bankers as the most solid people in town? Chances are, if you know the middle-level managers at your bank, you may have sensed they're constantly on the lookout for job openings elsewhere -- they may even have asked you if you've heard of any. The banker has gone from the assured, conservative fellow who never sweats to the scared temp, uncertain of where he may be working next year -- or next week.

Unfair? Probably -- but the banking industry has brought it on itself. There's more money in mutual funds now than in bank accounts. And if you want banker's hours, look no further than an ATM.

Chicago Tribune