The Move Your Money movement has firmly taken hold on Main Street America. Lindsay Shively reports on the project for KSHB-TV News in Kansas City where some local credit unions, she says, are growing by the thousands.
See other press and video coverage.
Archie McDonnell, Jr., President and CEO of Citizens National Bank of Meridian, Miss., is a big fan of the Move Your Money project. McDonnell, whose father was the bank’s CEO for almost 40 years before he took over, is a proud local banker who epitomizes Main Street financial institutions.
had enough of the big banks,” he said. “These banks have repeatedly hit their customers with excessive interest rates on their credit cards, and taken part in risky lending practices, while their top executives paid themselves big bonuses. Then, when times got tough, these banks turned to the federal government to bail them out.”
“Consumers are waking up and realizing that they can do their part to change things. They can vote with their money, so to speak, and choose to move their money,” McDonnell said.
“Community banks are the cure for this greed that has spun out of control,” McDonnell said. There are still more than 8,000 community banks in this country that are good stewards of their depositors’ money and reinvest money locally,” McDonnell said. “Community banks are by the people, for the people, and invest back into local communities,” he said.
Earlier this year the city of Lake Oswego, Ore., pledged to move over $1 million to local community banks to spur economic growth and encourage news jobs. Oregon Public Broadcasting radio show Think Out Loud took a look at the plans and encouraged listeners to call in and talk about where they banked and why. Listen to the show.
We get a lot of inquiries about how many people actually most their money because of this campaign. Unfortunately, that number is hard to track, but this movement taps into a much larger frustration that people have with the big banks. A recent Zogby poll, for instance, notes that almost one-tenth of Americans have moved at least some of their money away from the big banks in protest, and an article by Jessica Hullinger in the Conducive Chronicle notes that this movement has encouraged people to express their frustration in all sorts of ways.
The outward frustration of these Americans has been complimented by research about customer service within big banks. A New York Times story recently said that according to a report from Forrester Research, customers of the country’s biggest banks are the least likely to trust their financial institution to do what’s best for them instead of the company’s bottom line. The article went on to list the seven least trusted banks in the country, with Bank of America, Chase, and Capital One being the bottom three.
Brent Hunsberger at Oregon Live says that the movement is far too young for anyone to gauge its effect, but that the growth of small banks is impossible to ignore.
Some consumers want to keep their money in their community, evidenced by The Huffington Post’s “Move Your Money” campaign. But it’s far too soon to gauge the extent of the movement. Big banks still pull in the bulk of new savings, checking and certificates of deposit.
[...]Still, deposits at community banks in Oregon are growing even faster — 11 percent during the 12 months ended June 2009, the latest market share data available from the FDIC. That’s nearly twice the growth rate (6 percent) at Oregon’s 15 large and regional banks.
Also, we like to think that our movement has prodded politicians in places like Minnesota, Maryland, New Mexico, Oregon and Los Angeles to think about keeping tax dollars in local banks and credit unions instead of shipping them off to Wall Street. Things like this are hard to measure, but the awareness everyone is raising is creating a real change in our culture. Keep it up!
Activists in St. Louis took the to the streets to protest the big banks’ foreclosure habits. The movement was organized by People’s Settlement St. Louis, among other groups. They pitched a tent in the lobby of one large bank and demanded to meet with a bank executive. Watch:
Minnesota’s state legislature was considering a bill to give preference to community banks and credit unions for dealings with state tax dollars. Unfortunately, those plans have failed after the state Senate was unable to bring its version to the floor. MinnPost’s Dave Beal reports:
Had HF 3205 passed, it would have given small banks and credit unions throughout Minnesota preferential treatment over large financial institutions in bidding for deposits of state funds. Similar legislation has been bandied about before, but the timing of Mahoney’s proposal was particularly noteworthy.
[...]Mahoney said he dropped the bill at the request of Minneapolis DFL Rep. Phyllis Kahn, after Sen. Dan Sparks, DFL-Austin, sponsor of the companion measure in the Senate, couldn’t get a hearing on it in that chamber. Kahn heads the House State Government Finance panel, often a channel for high-priority bills.
Her unit faces a crowded docket. She put off discussions of HF 3205 in recent days. “How can you ask me to waste 10 to 20 minutes in committee on a bill that can’t pass the Senate?” Mahoney quoted her as asking him. “If it had moved in the Senate, it probably would have passed over here,” he added
The legislation was modeled after a bill that made it through New Mexico’s House of Representatives but did not make it to the floor of the Senate before the legislative session ended earlier this year. Both bills have a good chance of being reintroduced next year.
Over the years the big banks have become even bigger and have taken up an increasingly larger slice of our national economy. There used to be a cap on bank size, limiting them to ten percent of the country’s deposits, but during the financial crisis that went out the window as banks consolidated and bought each other up to stay alive. Stacy Mitchell, Senior Research at the New Rules Project’s Community Banking Initiative, explains what’s going on. She also sees a light at the end of the tunnel in the financial regulatory reform bill:
a cap on the size of banks — one small enough not only to limit mergers among giants in the future but to require an orderly break-up of the biggest banks — ought to be a key pillar of financial reform. It’s by no means the only policy needed to curtail systemic risk and rebuild a community-oriented financial system, but it is easily the best and most straightforward tool we have for constraining the concentration of banking power.
Dodd’s financial reform bill lacks a hard cap on bank size, but an amendment put forward by Senator Sherrod Brown of Ohio would strictly limit the size of banks and, if enacted, entail breaking the country’s largest banks into several pieces.
Brown’s proposal fixes several flaws in the current deposit cap, which Congress adopted in 1994 as part of a sweeping deregulation bill that allowed banks to merge and expand across state borders with virtually no restrictions. The cap was added to the bill in order to appease public concerns that a few banks would become too large and powerful. (Those concerns proved well-founded. When the law passed, the top five banks together held 12 percent of U.S. deposits. A mere fifteen years later, the top five account for nearly 40 percent of deposits.)
One problem with the current size limit is that it permits a bank to exceed the cap if it acquires a financial institution that is either in danger of going under or is organized as something other than a commercial bank, such as a savings and loan. These were the loopholes that allowed the Federal Reserve to escort Bank of America and Wells Fargo over the limit in 2008.
Most consumers know that the Too Big To Fail banks are a problem, but many worry that the government is not as concerned as it should be. Sam Zamarripa, former Georgia state legislator and one of the creators of Stop Too Big To Fail, is one of those people and he calls on Congress to condemn these institutions and see them for the un-American firms that they are:
down, the most important driver of big box bankers is not American style competition or love for the free market. Neither do they embrace entrepreneurship and innovation. Big banks are motivated to have an unfair advantage and to keep that advantage for as long as possible. For the captains of the big banks, there are no rules and no principles – just a clear-eyed focus on the economics of getting bigger and bigger with larger and larger paydays. If that sounds like pure capitalism, it is.
It’s time for Congress to clearly see the too big to fail ruse for the manipulative, pure capitalism that it is. Yes, systemic risks exist and interconnectivity extends risk into the fabric of our lives and businesses, but how did that risk get transferred to the federal government, then to you and me? Yes, it is very difficult to fully regulate the overnight credit repos of corporate finance, but does that mean we should pay if it fails? Financial products will continue to become more and more complicated but why do we subsidize the risk? In essence, how did the big bank problem become a problem for you and me? How did the banks transfer the risk from their balance sheet to the taxpayers? Fix that, and you have real reform.
[...]When regulators make it too expensive for owners and creditors of big banks to fail, the idea of too big to fail will settle into the grave yard of dead clichés and clever ruses. We cannot accept the premise that somehow you and I created the risks associated with too big to fail. We need reform that changes the game and make the cost of too big to fail, too expense for the big banks and their owners. It’s that simple.
With the terrible publicity and general outcry against the big banks, it’s a wonder why more people aren’t switching their bank accounts. New York Times business writer Ron Lieber took up the question but was left unsatisfied with any of the answers he found. In the end, he concludes that there are a few perks for moving your money, and not too many reasons not to.
a more aggressive case for switching. A number of community banks offer 3 or 4 percent interest on deposits if you’re a heavy debit card user. Search for them at checkingfinder.com.
ING Direct, meanwhile, preaches simplicity with its Electric Orange checking account: No minimum balance, interest on deposits and a line of credit in lieu of expensive overdrafts.
PerkStreet’s pitch, meanwhile, is a rewards program that gives debit card users about 1 percent of their spending back in the form of gift cards, far more than most standard bank debit rewards programs pay.
Of course, we also encourage you to search for a community bank or credit union in your neighborhood. But there are a million reasons to move your money and not too many not to.
In their book, The Road from Ruin, Matthew Bishop and Michael Green put forth the idea that values can be put back into capitalism so that the system works for everyday people. That notion was met with some skepticism but they maintain that it’s possible for the marketplace to be competitive and ethical at the same time. They cite the Move Your Money movement as one prime example:
is, well, the bottom line. We don’t think businessmen will become saints but we do think that the crash of 2008 is proof-positive that the short-termist “greed is good” capitalism that dominated the past 30 years has failed — not just failed our society but failed its shareholders too. [...]
Short-termism in the stock market allowed a suicidally irresponsible culture to flourish, especially on Wall Street — where the bonuses grew ever larger as banks took on ever more reckless amounts of risky debt. This was the era of IBGYBG — “I’ll Be Gone, You’ll Be Gone” — in which bankers did terrible deals safe in the knowledge that they would have pocketed their commissions and moved on to a new job before the awful consequences of the deals became clear.
By contrast, the financier who has emerged from this crisis with his reputation stronger than ever is Warren Buffett, the doyenne of long term investing. Buffett’s strategy is all based on backing good managers at good companies and sticking with them for the long term. Nor is he alone. In “The Road From Ruin” we discuss the case of Shorebank, an explicitly ethical bank that has targeted sub-prime borrowers but lent to them in a responsible way. Whereas the fraudulent and near-fraudulent loans of mortgage giants like Countrywide all went south as the housing market collapsed, Shorebank’s loans were much more robust because they had done the old-fashioned thing of building relationships with clients, clients whom they knew. Community banks that behaved in this sort of responsibly long-term way deserve our support, which is why we are so enthusiastic about the “move your money” campaign championed by the Huffington Post.
John Hope Bryant, author of Love Leadership: The New Way to Lead in a Fear-Based World and vice chairman of the U.S. President’s Advisory Council on Financial Literacy, says that it is our responsibility to fix our values and that, in doing so, we will repair our economy. The best thing we can do, he argues, is to become financially literate.
how I think it can be done (a summary of my remarks from the Corporate Citizenship Conference):
1. Write letters to bank CEOs and when they don’t listen, to their regulators, telling them of not just your challenges, but how you recommend they run a better business. With approaches like this you seek justice for yourself, but you also help them to win, and society to become “better.”
2. When CEOs and others don’t listen, follow the lead of the Huffington Post and simply “move your money.” There is power in your economic vote as well as your political vote.
3. Host a Financial Literacy Family Meeting every week at your own kitchen table, with your mate and your family, and make sure that your family has the financial literacy knowledge and tools they so rightly deserve. Remember that the #1 reason for divorce in America is money. Start with a free course in financial literacy for your children with Operation HOPE’s Banking on Our Future, www.bankingonourfuture.org, or other credible organizations such as Junior Achievement.
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