Move Your Money

Financial reform legislation will soon be passed into law, but unfortunately Congress’s version of reform falls short in a lot of areas. There is work still to do to rein in the “Too Big To Fail” banks, limit some of their casino-style bets and create a broader, more stable financial system. While Congress may well rewrite the rules again to further protect us from the big banks, we can’t wait; it’s up to us to us to act on our own. Stacy Mitchell, of the New Rules Project’s Community Banking Initiative, explains what we can do:

The economic crisis is not over, and the rot and malfunctioning at the heart of our banking system remains. Indeed, since the collapse, giant banks have only grown bigger and more powerful, and less responsive to the needs of the real economy. While the financial reform bill includes several worthwhile measures, it will not set the industry right or entail a fundamental alteration of its scale and structure.

[...]What would a banking system truly aligned with the interests of households and businesses look like? For one, it would be composed primarily of small, locally owned banks and credit unions. Unlike big banks, local financial institutions devote nearly all of their resources to core banking activities, namely taking deposits and making loans. Their fortunes are thus inextricably linked to the well-being of their depositors and borrowers. They prosper only when their communities do.

[...]The best way to spur Congress to act, however, isn’t to wait around for it to do so. We can and should take financial reform into our own hands.

That means moving our money — and not just our savings, but our borrowing too. Tens of thousands of people have already broken up with big banks and moved to locally owned institutions. Although the cascade has not yet been large enough to make a sizable dent in the finances of big banks, it has already been a boon to many small banks and credit unions, which are seeing a surge in deposits and lending.

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Aside from moving our personal accounts, we can also move big money at our offices, schools and places of worship. We should also encourage our state and city governments to act and enforce regulation to protect their citizens. Lastly, some activists are working towards a state-owned “banker’s bank” like the Bank of North Dakota, which helps smaller banks finance large projects and offers cheap loans and has been thriving during the financial crisis.