Traveling down Fourth Street in San Rafael, many of the small businesses are displaying “No Target San Rafael” signs in their windows. According to Architect Jay Yinger of Jay Yinger Associates, who is opening a new restaurant on Fourth Street, there are serious concerns among merchants with a big “box store” moving into their neighborhood. Sound a bit like Walmartization?
“Big box stores with their cut-rate pricing models, take business away from the small businesses that are at the very social and cultural heart of this vibrant downtown area”, says Yinger. He adds, “The economic reality is that small businesses can’t compete with these big box stores and are likely to feel a material decline in their revenue. Ultimately, this could result in layoffs, closing local businesses and ending the recycling of local capital into our community.” But not to worry, this outflow of dollars will help the fine folks of Minneapolis, where Target is headquartered, but what about the fine folks of San Rafael?
An interesting parallel to the plight of community banks who are closing at an alarming rate, 151 year to date as of December 17, 2010, and the federal policy of saving banks that are perceived as being “Too Big To Fail”, many of whom were responsible for our current recession. From today’s New York Times, 12/23/2010, Breaking Views column, the paper suggests that the demise of hundreds of community banks…”may not be such a disaster for regulators, shareholders and, perhaps surprisingly, consumers…”having a few, heavily regulated banks… might actually be safer.”
What about consumer choice? What about antitrust laws and the concentration of power into the hands of a few large banks? These banks are generally large nationwide financial institutions that are characterized by former Federal Reserve Chairman Alan Greenspan as “If they’re too big to fail, they’re too big.” While Mr. Greenspan’s comments are a bit disingenuous for the person who oversaw the Federal Reserve Bank and monetary policy from 1987 until 2006, these large banks continue to abuse their position and when they are caught, pay a financial penalty and receive a slap on the wrist. From the Bank Investment Daily the week of December 10th, 2010, “Dividend:The CEO of Bank of America said he will target a dividend to shareholders of 30% of earnings next year, as soon as it passes Fed stress testing requirements”, and “Case Settled:Bank of America paid $137mm (million) to settle a suit brought by the SEC that accused the bank of bid rigging and other anti-competitive practices in the sale of the derivatives to states, municipalities, school districts and non-profits.”
So let’s get this straight, B of A, major nationwide bank is going to raise its dividend, and oh, by the way, they were busted for bid rigging and paid $137 million dollars to settle a lawsuit. What will the picture look like should only a few large banks control communities like San Rafael? Probably not a very pretty picture!