The banking behemoths have used our dollars to destroy our economy. The Move Your Money campaign says we don't have to wait for financial reform to fight back.
February 5, 2010 |
Since the burst of the financial bubble in 2008, and surely before, millions of Americans have watched as their life savings dwindled to fumes. Unemployment has held steady at 10 percent or above (among minority groups, it will likely
hit the 20s this year) and
one in five Americans went hungry last year. As the human recession has worsened, Congress has been slow to act to quell it, while they've rushed to the aid of too-big-to-fail banks.
A new campaign called Move Your Money aims to tackle the frustrations with the Wall Street banks, and the politicians they've bought off, head on. The campaign is based on a simple idea: Americans ought to move their money from the big banks -- that took billions in taxpayer money and continue to foist outrageous interest rates even as they cut lending -- to local financial institutions that actually are a part of their communities. Move the money back home.
In the first 48 hours of the campaign, which launched days before the New Year, over 100,000 people responded with inquiries on how to move their money and credit to the nation's 7,600 community banks and 8,000 credit unions.
Channeling anger for change
The action campaign isn't the first to base itself on widespread anger toward the largest banks in the country. In April last year, that anger was channeled into A New Way Forward (ANWF). The group organized protests across the country that sought to break up the "zombie" banks.
The worst of the bad guys, nearly everyone agrees, are the so-called Big Six: JP Morgan/Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley and Goldman Sachs. Experts believe the first four alone hold at least 40 percent of our nation's deposits and half of all bank assets.
But despite ANWF's nationwide rallies -- which remained relatively small, though attended by voters of all political stripes -- breaking up the banks has never been on the legislative table. That may be one reason why Move Your Money has garnered so much excitement. It does not seek to force people on the Hill or in the White House, many of whom are indebted to banking interests, to act.
Instead, Move Your Money calls for direct action by regular people who are irate at the overly cautious pace of financial reform.
"Our money has been used to make the system worse -- what if we used it to make the system better?" wrote Arianna Huffington and Rob Johnson -- she of the Huffington Post, he of the Roosevelt Institute -- in their campaign introduction. They framed Move Your Money as a New Year's resolution for all (most) Americans who feel abandoned by their massive, bailed-out banks.
The campaign comes at an interesting time for small financial institutions. Since the 1980s, the number of banks with assets of $1 billion or less has fallen by more than half, according to Stacy Mitchell, head of the New Rules' Community Banking Initiative at the Institute for Local Self-Reliance.
As small banks and credit unions have gone out of business or been eaten up by the big banks, Americans have gotten used to banking at a distance. The banking experience is now usually characterized by automatic tellers, automated phone-trees, and other forms of faceless communication.
Of course, the growth of national banks has increased some conveniences, such as ATMs you can access anywhere in the country, but who cares about saving two dollars on your withdrawals when your bank is perfectly willing to up your credit card rate from 4.99 to 40.99 percent in one fell swoop (as Citi did to one man with good credit) for no fathomable reason? You're just as faceless to them as they are to you.
With examples such as these, Move Your Money hopes to dispel longstanding myths that big banks are cheaper -- and nicer -- than smaller ones.
A growing movement
As of this week, 23,000 -- or about 50 percent -- of all U.S. zip codes have been searched for through Move Your Money's "Find a Bank" feature, says Dennis Santiago, whose influential bank-rating firm Institutional Risk Analytics donated the tool.
One community bank with five branches in Northern California recently called Santiago to report it had a $1 million increase in deposits per branch since the start of the campaign, which the bank had not yet caught wind of.
While Move Your Money's search tool only includes community banks, the Credit Union Times reports that since the start of the campaign, two of the largest credit union associations have reported 300 percent search increases in their credit union databases since Move Your Money launched.
The American Debt Relief Challenge, which aims to get people to transfer their credit card balances from big banks to credit unions, shows that Americans have saved nearly $20 million by transferring. That's a monthly average of $200 in amortized savings per consumer, says Jamie Chase, a principal at Credit Union Strategic Planning, which is a sponsor of the challenge.
Local governments are jumping on the bandwagon, too. In New Mexico, a bill's been introduced to move the state's $1.4 billion cash account from Bank of America to local banks. In Oregon, the Democratic gubernatorial candidate, Bill Bradbury, is basing much of his candidacy on moving the state's money to Oregon-only community banks. And Michael Bloomberg, the New York City mayor who built his billionaire empire on financial information services, announced the city would move $25 million of its municipal tax dollars to neighborhood credit unions.
Even ANWF, which had based its organizing around breaking up the banks last year, will be waging a similar campaign that launches in a week, says Tiffiniy Cheng, ANWF's national coordinator. Called Break Up With Your Bank, it will ask people to stop using their credit cards and use cash as much as possible. If you must have a credit card, switch to a low-interest card from a local bank, Cheng says.
It's no surprise so many are so into the idea of moving capital into their communities. For starters, with smaller banks, you can kiss all that hollow interaction goodbye.
"Smaller banks can take a closer, personal look. Your loan request won't be decided by a computer model," says Stacy Mitchell. "A loan officer there understands the local market characteristics, sees the borrower as a person with an individual character and history."
The face-to-face service is a plus but Mitchell's research shows even bigger incentives for making the switch. She says community banks and credit unions are very viable and generate real benefits for the communities in which they're located. Among the benefits she cites are more small business lending, lower costs for consumers, better lending practices and the nurturing of social capital on the local level.
Santiago, the bank-rater, agrees with most of these points but says lower costs for consumers can be spotty, depending on the financial institution.
That being said, however: "Right now, there are more good small banks than good big banks. And you should move your money to good banks," he says.
The naysayers
While there is a great deal of populist excitement behind Move Your Money, it also has a few detractors.
Just this week, Doug Henwood, publisher of the economic affairs newsletter, Left Business Observer, wrote: "Money is fungible, protean, and highly mobile even when it looks locally rooted."
To illustrate the argument, Henwood used Move Your Money's search tool to find recommended community banks in his area and discovered that one offered wealth management services through Merrill Lynch (now owned by Bank of America) in addition to being a major financier of the gentrification of predominantly black neighborhoods. Another suggested bank had three-quarters of its assets in U.S. Treasury bonds, instead of local loans.
"It's very, very hard to keep your hands clean in the world," Henwood said. "I generally tell people to hold their nose and do the right things with the rest of their lives because you can't really do a lot of good with your money."
Stacy Mitchell, however, points out that the Move Your Money search tool is not all-inclusive, adding: "Small financial institutions are far more oriented toward the needs of their local communities and the productive economy than big banks are. As a group, banks under $1 billion in assets have less than two percent of their assets lent via the federal funds market to other banks. They devote 67 percent of their assets to lending, almost all within their city or region, and more than one-quarter of that goes to small business lending."
Moving our money may not be enough on its own, Mitchell says, "but to suggest that the choices we make in the marketplace have absolutely no meaning is absurd."
Even Henwood concedes there are some "pretty great community development" banks worth moving your money to, if you do the research. Indeed, both community banks (which are for-profit) and credit unions (which are non-profit) can qualify for Community Development Financial Institution (CDFI) certification, which means they are committed to offering financial services to under-banked markets or populations.
Naturally, there are detractors at the top, too. Last month Politico asked Treasury Secretary Tim Geithner whether he felt the Move Your Money campaign was a good idea. "I don't," he said, before adding that he believes consumers have a right to demand better service from their financial institutions.
From the grassroots up
The Move Your Money campaign has made many people realize that some elements of financial reform may lie in their own hands. While cynics may point out that populist reforms can only take you so far, one idea behind Move Your Money is that this grassroots take on financial reform -- if it continues to have impact and grow -- may actually increase the possibility of financial reform at the federal level.
The banking behemoths have used our dollars to destroy the economy. We can use those same dollars to fight back.
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