After the banking drama crushed the broader markets this week, a lot of folks were questioning how sound their own banks are.
Of course, it’s often hard to tell, because most of these bigger banks only have to present the illusion of safety, and they get away with this because the companies charged with the responsibility of auditing them aren’t always operating honorably.
Worth noting: KPMG, the company that audited SVB (NASDAQ: SIVB) and Signature (NASDAQ: SBNY), gave both of those banks clean audits
This is a bit concerning considering KPMG is one of the big four accounting firms. Last year it did $35 billion in sales, and it also counts Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC) among its many clients. This is not reassuring.
And check this out …
Last year, KPMG spent more than $2 million on lobbying efforts, and 13 out of 20 KPMG lobbyists previously held government jobs. That’s pretty shady, if you ask me.
Also pretty shady about these independent auditors is that they’re not actually operating in an independent capacity.
They can’t be independent when they are DEPENDENT upon their clients, who choose and pay them.
The entire thing is set up in a way that auditors are incentivized to please their clients – not protect the public.
Meanwhile, the public is supposed to rely on these auditors to do the right thing?
That’s a tough pill to swallow.
Of course, this is not a condemnation of all banks. There are plenty of banks that do act responsibility and honorably. Finding them, however, can be difficult. So what I typically tell folks looking for a new bank is to find a bank that also operates as a B Corp.
If you’re unfamiliar, a B Corp is a company that meets a very high standard for environmental, social and governance guidelines.
Now before you write this off as some meaningless “woke capitalism” type thing, understand that these B Corp banks tend to operate quite conservatively, don’t take huge risks, and tend to be subjugated to far more oversight than the big banks. Or at least legitimate oversights, as these are not the types of banks that spend billions on lobbying or have former federal lawmakers sitting on their boards. They don’t have a “get out of jail free” card, so they can’t pull the kind of shit SVB and Signature did.
If you’re interested in seeing if there’s a B Corp bank in your neck of the woods, click here: https://www.bcorporation.net/en-us/find-a-b-corp?query=banks