This past July, Republicans in the Senate rejected a bill aimed to help struggling small businesses through the expansion of loan programs and tax breaks. As David Herszenhorn reported in the July 30 New York Times article "Republicans Block Bill to Aid Small Business," this move was largely spurred by Republican desires "to deny Democrats any further legislative accomplishments ahead of November's midterm elections." Herszenhorn's reasoning fails to recognize other justified reasons for Republican opposition — namely, the cost of the program, which would be an additional stress on our already strained economy. But the proposition of the lending program itself and the increased need for one given the current recession should cause members of the Tufts community to reexamine the business practices in which we are all involved.
Firstly, we need to realize that this recession is the result of large banks and irresponsible banking practices. There are a variety of factors that led to the current economic situation, but all of them (irresponsible borrowing, lack of regulation, lack of transparency about risks being taken) somehow come back to the "too big to fail" banks. Big banks package and resell large loans, capitalize off of students and uneducated borrowers, charge big fees and then take risks with our money. At the same time, they have little to no beneficial impact on our local community. That's why this bill would have been a great step toward remedying some of those practices that got us into this position in the first place; the small business loans and tax breaks were going to be distributed by creating a $30 billion lending program that would engage with local banks, which are proven to make more loans to small businesses. They also charge fewer fees than the big banks, are less likely to engage in the irresponsible borrowing of larger banks and are more accountable to their clients.
It's sad that this bill was shut down and equally sad that it is being lauded as a partisan issue. We can all agree, regardless of political orientation, that supporting our neighbors, assisting fledgling small businesses, maintaining long−standing businesses in our community and promoting responsible banking practices should be priorities. That's why Students at Tufts for Investment Responsibility (STIR) is launching our campaign for community investment at Tufts. Let's put our money in the community and act as more than "global citizens" and act as local ones, too.
This idea is hardly new. The Community Reinvestment Act of 1977 encouraged banks and savings associations to assist borrowers of all income levels in their communities. The bill was originally passed to prevent redlining, or participating in discriminatory credit practices to low−income (and primarily black) borrowers. But even though it has been more than 30 years since the bill's passage, we can still do much, much more. As tuition−paying students at this school, we have power. Furthermore, the reputation and $1 billion endowment of Tufts University is powerful. We need to make a collective statement and say where we want to put our money and how we want to be active members of our community.
Students at Macalester College have done this; they moved $500,000 to a local bank in 2007, and the bank is now working to establish student internship opportunities at the bank and through the local businesses the bank supports. And at Mount Holyoke College, they raised $25,000 for a pilot Responsible Investment Fund that has invested in a nearby community−development financial institution that emphasizes local lending. These examples from peer institutions demonstrate that community investment is not simply possible but also beneficial. Aside from material benefits, Tufts will reap the rewards, such as an improved reputation and town−gown relations that come with such a progressive, community−oriented decision. Change really is possible, and other schools are catching on. Let's join them and do what Congress failed to do this summer. Let's support community investment!
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