Move Your Money

It’s great to keep your money with local banks and credit unions — you save money and help build the wealth of your community all while helping to create a more fair financial system. But it’s also a wonderful experience to be a George Bailey-style community banker, where you know your depositors and they know you. As the daughter of one of these types of bankers, Katy Welter had it in her blood from birth.

It’s easy to suppose that I was raised with a sense of entitlement about the bank. But that wasn’t the case. I learned that the bank existed because of its employees and customers–not its shareholders. And that the money in the bank did not belong to us. We were its custodians. We mediated between the savers and the borrowers in an act of financial alchemy I now know to be called the “multiplier effect.” The process, as we’ve all learned, is more treacherous than a circular saw and as mysterious as the FBI. But I grew up with it, and came to understand and appreciate the magic of collecting one hundred deposits in order to provide one loan, which generates more deposits and loans, and so on.

Upon my college graduation, my dad gave me a strange-looking picture I had made when I was nine years old. I’d drawn a large grey cat in a shirt and tie (presumably an illustration of my father, modeled after our family cat), wearing a familiar bank pin on his lapel. The cat stands in his office and next to a yellow couch sprinkled with dollar signs. Above the couch, I drew a brown wooden frame around the declaration, “To Be a Banker is To Be in Heaven!” I knew my place in the world earlier than most.

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Do you know your banker? If you bank with a local financial institution, you probably do. And odds are their kids are drawing adorable pictures of them.

In finance, everyone’s looking for the magic pill that will make them rich overnight. Unfortunately, it doesn’t exist. Unless you’re the Wall Street banks, that is. They can just get billions of dollars of bailout money from the federal government after they bring the economy to the brink of collapse. Don McNay tells the story:

The reason that Wall Street collapsed is that too many companies were looking for their own “magic pill.” They were focused on piling up short term profits, so they could get their multi-million dollar bonuses and didn’t care about the long term.

Turns out that Wall Street had a magic pill. It was called the bailout. Thanks to their friends and lobbyists in Washington, Wall Street was able to screw up and have someone else clean up the mess.

It doesn’t work that way for the rest of us. With your health, to coin an old song, “if you play around you lose your life.” Same thing holds true with your money. Too many people are dying old and broke because they don’t have a long term plan.

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So what can you do? Move your money to a local bank or credit union and level the playing field. Take some of the power away from the big banks while also investing in your own community.

Moving your money won’t solve every problem in the world, of course, but it’s a simple way to take a stand and make things a little better.

Steve Verdier, the Executive Vice President of the Independent Community Bankers of America went on C-SPAN’s Washington Journal to discuss the state of community banks and how things are shaping up under new financial regulation. While on the program, he was asked by a viewer if the ICBA has seen an increase in community bank customers who had left their big banks in exchange for something smaller. For that, Verdier had to credit the Move Your Money campaign.

I think some of our banks have seen that and I think some of the state and local governments have tried that as well. I think there’s kind of a “Well, it’s just easy for us to put all of our money into one of the big banks,” but It really makes sense for a state or local government to think, “Where is that money going to be invested?” And if you put it into a local bank it’s going to be invested locally, and that’s, I think, an important government function as well. It might take a little more paperwork, but I think the payoff is going to be terrific if they do that.

Unfortunately, it’s difficult to track the exact amount of money moved to local financial institutions, but we’re glad to hear that the Independent Community Bankers of America are on board with our effort. And we agree that more towns and states need to think about keeping tax dollars in financial institutions that invest in their community, not Wall Street.

Watch the whole interview on the Washington Journal website. The question about the Move Your Money campaign start at about 26:00.

The mission of Move Your Money is to encourage individuals and institutions to take their money out of Too Big To Fail banks and invest in community banks and credit unions.

What began as a conversation among friends over a dinner before Christmas has rapidly turned into a national grassroots movement. So far it’s generated hundreds of stories, millions of website visits, and thousands of individual actions.

Small banks and credit unions have experienced a surge in activity as a result.

And, amazingly, to this point it’s all been run on a volunteer basis, with people chipping in little bits of free time here and there. But now, as it grows, those volunteers don’t have the time to field the dozens of requests and opportunities that come their way every week. So it’s time to put a small operation and some resources behind the effort.

As a result, we are setting up a nonprofit project and looking to raise $200,000 to hire a two full-time staffers and furnish them with a modest budget. They will help recruit, coordinate and network groups working on Move Your Money efforts; create a more dynamic website that can serve as both a clearinghouse for the effort and a social networking space for people to organize their own efforts and connect with others; identify the policy work that needs to be done; recruit other organizations to help with that work; promote and share the results of their efforts; get more people involved in untapped constituencies. We’re also working to start local rallies in cities across the country to connect people with local banks and credit unions and encourage everyone to bank locally.

We know these are hard times for everyone, but we need your help. With you, we can take it to the next level.

All donations are tax deductible.

Thank you so much for all of your support. We can’t wait to make this movement grow larger.

Colleges and universities control millions (and even billions) of dollars of endowment funds. But do you know where your alma mater or local school puts all that money? Probably not. That’s a problem. Institutions of high education have the responsibility to make sure that the money they control goes back into their communities instead of shipping it off to Wall Street mega-banks and hedge fund managers. Steve Flynn, of the University of North Carolina Greensboro, thinks that his community is too charitable to not keep that money local. He explains:

I believe American Universities need a new paradigm as it relates to philanthropy and investment. We are expert at and resource significantly our planned giving enterprises on our campuses. Yet, our ‘expertise’ in terms of soliciting gifts goes only so far. In terms of actual investment decisions by investment managers, we typically outsource such expertise to ‘outsiders’ such as Cambridge and Associates (in the case of University of North Carolina-Greensboro I believe). The result? However good or bad our endowment returns each year (and its moral and sustainable impacts) how much of our endowment income and investments are actually directly benefiting our own community? I have no idea, since such information is not available in the opaque universe of endowment investing, but I would venture to say the answer might be none.



We are currently living in a world where assumed paradigmatic truths (which evolved over the last 30 or so years) about capitalism and high finance are now in question. Universities trained and staffed the whiz kids on Wall Street and London that got us into this mess. Having trained them, universities assumed these whiz kids would do right by university endowments. In the wreckage of 2008, where did that get us?



What do universities have to show for it? Far more importantly, what are our local communities gaining when we outsource our own investment management? I believe new thinking is the way of the world in the coming century and universities seeking relevance must change their approach.

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We agree that colleges and universities have a duty to invest responsibly. That’s why we support the Responsible Endowments Coalition in their fight to get schools to invest ethically.

Even after financial reform legislation gets signed into law, there are still a number of great ways to create a more just and stable financial system for the future. We like to think that the Move Your Money project is one of them. The Nation’s editor and publisher, Katrina vanden Heuvel, agrees with us in a column for the Washington Post, and points to demands made by union leaders and the city of New York who are demanding that Wall Street do more to prevent foreclosures as a prime example of ways to hold the big banks accountable.

Arianna Huffington’s Move Your Money campaign handed consumers a creative tool with which to hit the big banks. It encourages them to divest their money from those banks and open accounts at smaller community banks and credit unions. Last week in New York City, the most powerful local union presidents and city Comptroller John Liu took another step when they let Wall Street banks know their response to the mortgage crisis is unacceptable.

The threat made implicitly in a letter — and explicitly by some of the union leaders — is that these institutional investors will move their pensions to more responsive financial institutions if the banks don’t improve mortgage-modification efforts immediately. The banks have until Sept. 1 to take specific steps, such as developing a plan to increase the number of modifications involving principal write-downs.

These unions represent over 500,000 working families, and New York City has a few bucks at its disposal, too. Civic and labor leaders can use this model to let banks know that if they don’t behave as good corporate citizens, they will move their big money to institutions that do.

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Vanden Heuvel also brings up the possibilities of state-owned banks and cooperative businesses as ways to help create a more sustaainable economy. Read all five of here suggestions here.

Recently, Goldman Sachs settled with the Securities and Exchange Commission over charges of fraud and misleading investors, to the tune of $550 million. While it might not seem like a lot for the investment giant, it’s a powerful statement and may have repercussions all across the country for holding Wall Street banks accountable. Other big investment firms suffered similar courtroom losses, which may discourage the big firms from irresponsible gambling with their clients’ money. Asst. law professor Ray Brescia believes that these small victories will help campaigns like the Move Your Money project to hold the big banks accountable:

Over the last few weeks, in addition to the Goldman settlement, a few critical events have also unfolded. Attorney General Richard Cordray of Ohio announced a $725 million settlement with AIG in a lawsuit over losses by Ohio pension funds due to that company’s misdeeds.

In addition, for $102 million, Attorney General Martha Coakley of Massachusetts settled its suit with Morgan Stanley over its practices in funding risky and abusive subprime lending in that state.

[...] Rather than taking the air out of such campaigns, the Ohio AIG agreement, Coakley’s settlement with Morgan Stanley and the Goldman agreement will likely embolden efforts to identify investment bank, mortgage bank and credit ratings agencies’ complicity in, and unjustified profits from, the lead up to the financial crisis.

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The city of New York has joined a handful of union leaders to demand that the major banks start taking steps to reduce the number of houses they foreclose on. Foreclosures in the city rose 16 percent in the city in the first three months of the year, and things are only getting worse. As a result, community groups like New York Communities for Change have teamed up to pressure the banks to take action. If they don’t, the unions and city will consider moving their money away. Public interest lawyer John Atlas explains:

If the banks fail to act, all parties involved could move their pension funds and bank deposits to other institutions. That is why the groups call their plan the Move Your Money campaign. They claim it will not only modify foreclosures and save homes, it will hold big banks accountable to the community where they take deposits and profit from government supported loans. After foreclosures, neighbors who remain behind suffer from declining property values, and local and state revenues plummet, contributing to a stagnant economy and high unemployment. The coalition is demanding answers by September 1.

Thus far the Obama administration plan — which relies on a voluntary mortgage modification program — has not worked, forcing New Yorkers to take matters into their own hands. The groups put Wall Street on notice that unless the banks increase the number of modifications, including principal write-downs, expedite the modification process and stop foreclosure proceedings while applications are being reviewed, the group will increase the pressure. “This is just the first step in a campaign to win loan modifications that stop preventable foreclosures. We’re saying it loud and clear – if the banks won’t listen, it’s time to move our money,” Jon Kest, NYCC’s executive director.

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The Senate recently passed the final version of financial reform, sending the bill to President Obama’s desk to sign into law. The new rules will help to rein in the nation’s biggest Wall Street banks and prevent some of the risky behavior that led to the greatest financial crisis since the Great Depression. While it does little to end the era of “Too Big To Fail,” the sweeping legislation has a number of positive features, including limiting some of the casino-style financial speculation and restricting the amount of taxpayer money banks can use for their own profits. The Huffington Post reports:

Despite the obstacles, some major reforms will be put in place by the bill and new authorities granted to regulators could — depending on whether that authority is acted on — reshape the financial industry. The bill creates a consumer financial protection entity over the strenuous objections of the GOP and Wall Street, brings serious reform to derivatives trading, gives regulators the authority to break up major banks that are deemed a threat to the system, authorizes a broad audit of the Federal Reserve, largely bars banks from trading taxpayer money for their own profit and bans many of the deceptive mortgage lending practices that fueled the housing bubble.

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Unfortunately, there is still work to do. Before the ink is even dry the big banks are ready to go with new policies to charge customers more money, including an end to free checking accounts and exploiting loopholes to make more risky investments. From the New York Times:

So after spending many millions of dollars to lobby against the legislation, bankers are now turning to Plan B: Adapting to the rules and turning them to their advantage.

Faced with new limits on fees associated with debit cards, for instance, Bank of America, Wells Fargo and others are imposing fees on checking accounts. Compelled to trade derivatives in the daylight of closely regulated clearinghouses, rather than in murky over-the-counter markets, titans like J.P. Morgan Investment Bank and Goldman Sachs are building up their derivatives brokerage operations. Their goal is to make up any lost profits — and perhaps make even more money than before — by becoming matchmakers in the vast market for these instruments, which critics say were a principal cause of the financial crisis.

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Even some smaller banks are adopting new fees to make money off of customers. Check with your bank to see if they are charging for new services or changing their policies.

Moving your money does more than helping to create a more stable financial system and making a political statement against the big banks; it’s also a good idea for your wallet. Outlets like Consumer Reports have already written about the individual benefits of banking locally, and now the AARP is encouraging its members to move their money. In particular, it suggests that readers check out local credit unions, saying that you’ll save money and get great service:

“We need a citizens’ intervention to reform our financial institutions,” says pundit Arianna Huffington. Late last year she launched Move Your Money, a campaign that urges Americans to shift their accounts to community banks and credit unions.

Some of us are responding: 9 percent of those polled by Zogby say they’ve taken some business away from banks, in protest. Moral outrage aside, there are always three compelling reasons to switch banks: lower fees, higher interest on deposits, and better service. As it turns out, you are likely to find all three at some of the smallest financial institutions in the nation: credit unions.

“The average consumer does much better at a credit union than at a bank,” says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. “Credit unions have lower requirements for waiving fees, offer better deals on car loans, and are generally more flexible in responding to customers’ problems.”

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Find a credit union or community bank near you at our Find A Bank/Credit Union page.