Move Your Money

Included in the government’s new financial reform laws are changes to the way banks make money from merchants during debit card transactions. These changes might make it seem like problems for interest-bearing accounts offered by some community banks, but the situation isn’t so clear cut. Syndicated columnist Scot Burns answers a question about this subject, and explains why moving your checking account to a local bank or credit union is a good idea.

All we know at this moment is that the new regulations will put pressure on bank earning sources, and debit fees to merchants are one of those sources. Another possible solution for your transaction account is to explore the accounts offered at credit unions. Many offer attractive interest rates.

Regardless of what happens, it is a good bet that you will get a somewhat better deal at a community bank or at a credit union than at one of the mega-banks. So I suggest searching for the best deal, then moving your money.

Finally, while it is a hassle to change banks, there is another reason to move your money to a (much) smaller institution: It may be the only way we can protect ourselves from the risk-seeking behaviors of the mega-banks.

Read more

When college students open their first bank account, odds are that they will stay with that financial institution for decades to come. That’s why it’s so important that new students keep their money with local banks and credit unions from the beginning. Beth Sallay, a graduate student in Utah, wrote to the Daily Utah Chronicle to tell her school to keep the big banks out:

Editor:

Every year I am disappointed to see the credit and banking companies setting up tables at the Union for the first week of fall classes. It is especially disheartening that these banks are those that were bailed out but are still practicing business as usual. Seeing them out hustling for business on campus, one could almost assume they were in some way affiliated with or acting on behalf of the university. I would like to see a table for a local bank not on the brink of financial ruin due to incompetence, shoddy business practices and not under a “too big to fail” status. Next fall, the university should be encouraging financial responsibility by banning the bailed-out banks and instead offering space to www.moveyourmoney.info so that these businesses can experience the consequences of their failure.

Beth Sallay,

Graduate student, Instruction and Educational Technology

We agree. That’s why we’ve teamed up with the Responsible Endowments Coalition to help students and schools use their money for good.

Are you procrastinating moving your money because you’re concerned about all the automatic payments for bills and loans? Well, you really have no excuse now. Our pals over at Facilitas have collaborated with the personal finance website Mint to offer a new BankSwitcher tool, which automatically identifies all of your automatic payments and makes switching easier. Best of all, the service is currently free white BankSwitcher is in its Beta phase. Just go to mint.bankswitcher.com to get started

After getting tens of billions of dollars of taxpayer money in the federal bailout, banks are turning around and using that cash to influence Washington. So far this year the top ten bailout recipients have spent more money on lobbyists than any other companies — to the tune of a combined $16.32 Million.

Leading the pack this year was JPMorgan Chase & Co., which spent $1.52 million on lobbying in the second quarter, on top of $1.51 million in the first quarter of 2010, for a total of $3.03 million, according to disclosure reports filed with the House of Representatives clerk’s office.

Citigroup Inc., the largest bank recipient of government funds during the crisis in late 2008 and early 2009, was second. The New York-based bank spend $1.47 million on lobbyists in the second quarter, after spending $1.31 million in the first quarter for a total of $2.78 million.

And Wall Street titan Goldman Sachs Group Inc. was third, with $1.58 million spent in the second quarter, on top of $1.19 million in the first quarter of 2010.

Read more

The pattern will only continue unless we put a stop to it. End the cycle by moving your money to a local bank or credit union.

In the months and years before the financial crisis, Wall Street had a party, but when the bubble popped Main Street was left with cleanup duty. When Wall Street was bailed out, most communities were left behind, unable to deal with devastatingly high rates of unemployment and foreclosure, problems that still wreck persist. Financial columnist Don McNay explains that we all bought into the illusion that Wall Street was selling us, but we should’ve known better:

We were living in fantasy land.

The fantasy is over. We woke up to a nightmare.

A nightmare that our nation has not yet dealt with.

People with addictions go through a process called “bottoming out.” They reach a point where they realize their actions are hurting themselves or others. They get help and dramatically change their lives.

Because of the Wall Street bailouts, America never got the chance to “bottom out.”

Like a drunk who keeps “having a drink or two,” America has not really dealt with the problems that got us in the mess.

Read more

Now we have the opportunity to create a new and better financial system by investing in sound local financial institutions. This way we can clean up Wall Street’s mess and assure that they never again leave us on their hook for their problems.

Every day we hear stories of people across the country who’ve moved their money to local community banks and credit unions. Here’s a small sampling:

Jennifer M.:

“Moved both my business and personal accounts today to a small community bank. It feels good not be encouraging the “big banksters” anymore. Bye bye Bank of America.”

Scott C. on Facebook:

“My money’s movin’, movin’, movin’. See ya around Citi. You’re just too much trouble to be dealing with now.”

Aja at Get Rich Slowly:

“I made a real difference, and while my tiny accounts are nothing to a company like Chase, they matter a lot to my local bank and my community. (And did I mention the free cookies?)”

See more on our Stories page. Leave a comment to share your own, or get in touch with us through Facebook, Twitter or YouTube.

Everyone always talks about trying to get their community’s economy back on track, but there’s one easy step you can take that will help support small businesses and create local jobs: move your money. It’s a pretty simple equation: small banks do the most lending to small businesses, and small businesses do the most hiring. Former community banker Katy Welter explains:

Small banks are small businesses, too. And they pay it forward. When you keep your checking or savings account–yes, even those of you with what you perceive to be “small change”–with a local bank, that bank loans it to local business owners (among other borrowers). The Small Business Administration defines “small business” in a striking number of ways, but generally it is a business with fewer than 500 (in some industries 100 or 1,000) employees. According to 2004 census data, these small businesses create more jobs than mid-sized and large businesses combined. Your deposit in a small bank could mean one fewer person in the now-staggeringly long unemployment line.

Small banks make significantly more small business loans than large banks, relative to the number of deposits they hold. While small banks hold only 12% of the country’s deposits, they make 20% of America’s small business loans. When it comes to loans for truly local businesses–loans under $100,000–small banks back an impressive 50% of them. And since the Small Business Administration estimates that half to two-thirds of new jobs are created by businesses with fewer than 20 employees, these small loans are critical to our growing economy. And this isn’t necessarily because big banks loan all their funds to big business: large corporations, after all, predominantly borrow in the form of bonds or commercial paper, rather than bank loans.

Read more

Still not convinced that small banks help local businesses? Here are some handy charts made by the New Rules Project’s Community Banking Initiative (because of different ways of classifying small businesses, the numbers may be slightly different from Katy’s):

You might think that in cases of bank fraud, the major banks side with their customers, but bestselling author Naomi Wolf learned that that’s not necessarily the case. She starting noticing irregularities with her Washington Mutual account back in 2005, but it took months for her bank to acknowledge the fraud. By the time it did, the bank ruled that it was too late to refund her stolen money. That’s when Wolf started looking into banks’ practices, and she found that cases of banks dragging their feet to rectify fraud situations are not rare — in fact, they’re habitual.

The longer it takes to close the corrupted account, the more difficult it is for the customer to have accountability with the bank’s fraud department — the more revenue for the bank. The bank freezes your ability to address the problem — but continues to charge you fees for the corrupted account. `Because of the fees that get drained out of an account, banks actually profit from bank fraud,’ explains [actuary Geoff] Kischuk.’ Multiply this by the number of times across the country a consumer account faces identity theft or bank fraud — and you see a mini-industry.

Customers assume that banking regulation and Congressional oversight means that if they find fraud on their checking accounts, there is accountability — which is not in fact the case; strong bank lobbyists translate into weak protections for consumers and, as you can see from the emails, the bank’s reasonable assumption that most customers in this situation will not be able to hold them accountable. And indeed, since legal action is time-consuming and expensive, most defrauded bank customers do eventually give up and go away.

Read more

She claims that more than $300,000 was stolen from her accounts. As a result, Wolf is suing JP Morgan Chase. Details of the suit can be found at The Smoking Gun. On our end, we hope Naomi takes her business to a safe and friendly local bank or credit union that will look out for her instead of its own bottom line.

The Move Your Money campaign has inspired millions to leave the big banks and has gained the support of prominent media figures and even a few politicians. But academics are also taking a serious look at the movement and concluding that it has the ability to play a powerful role in creating a new financial system. At least that’s what Raymond H. Brescia, associate law professor at Albany Law School, has to say in his new paper, The Cost of Inequality: Social Distance, Predatory Conduct, and the Financial Crisis:

Is there a way to take such lessons to scale, and capture the benefits of social capital in financial transactions?

A grassroots movement is afoot that attempts to do just that. The “Move Your Money” campaign was hatched by Arianna Huffington and others in late 2009 as a way to bring community banking values back to retail banking. Is there a way to take such lessons to scale, and capture the benefits of social capital in financial transactions? This effort is designed to convince retail banking consumers to utilize the banking services of those financial institutions with strong ties to local communities. Using a risk assessment tool developed by Institutional Risk Analytics,227 the Move Your Campaign claims that over 2 million participants, moving $5 Billion in assets, have ended their relationship with their large banks in institutions.228 Institutional and governmental investors have also adopted similar tactics. Municipalities, universities, unions and public pension funds have either pledged to invest and bank with community-based institutions, or have attempted to exact compliance with demands for behavioral changes from the larger institutions, like improved performance in terms of modifying mortgages.

[...]a consumer movement—both individual and institutional—may stand a better chance than regulation of re-infusing financial transactions with elements of social capital, by driving reform of institutions, both large and small, to take less risk, maintain better customer relations, reinvest in local communities and meet local priorities. Such efforts are well under way, yet it would be premature to attempt to gauge their success in meeting such goals.

Read the full paper

For her new book, Move Your Money co-founder Arianna Huffington cites our project as an example of ways that individuals can act to prevent America from becoming a third world nation. The idea was “was a lightbulb moment,” she says, and since then it has reached across the country:

The idea is neither liberal nor conservative–it’s productive populism at its best–and has been embraced by those on both sides of the ideological spectrum who are sick and tired of the megabanks and are ready to do something about it.

The big banks may still be “too big to fail”–but they are not too big to feel the impact of hundreds of thousands of people taking action to change a broken financial and political system. The key thing is we don’t have to wait on Washington to get its act together.

People from all walks of life have written in to say how empowering the small act of moving their money was. One of them, H. Lee Grove, wrote, “Thank you so much. I have been so depressed about the apathy I had fallen into, being able to do nothing as the bully on the playground beat everyone to hell right in front of my eyes, that I would just lie in bed for days at a time. I moved my money to a credit union and I feel fantastic.”

Read more from Third World America