With Your Mind On Moving Your Money And Moving Your Money On Your Mind

Arianna Huffington and Rob Johnson at HuffPo:

Last week, over a pre-Christmas dinner, the two of us, along with political strategist Alexis McGill, filmmaker/author Eugene Jarecki, and Nick Penniman of the HuffPost Investigative Fund, began talking about the huge, growing chasm between the fortunes of Wall Street banks and Main Street banks, and started discussing what concrete steps individuals could take to help create a better financial system. Before long, the conversation turned practical, and with some help from friends in the world of bank analysis, a video and website were produced devoted to a simple idea: Move Your Money.

The big banks on Wall Street, propped up by taxpayer money and government guarantees, have had a record year, making record profits while returning to the highly leveraged activities that brought our economy to the brink of disaster. In a slap in the face to taxpayers, they have also cut back on the money they are lending, even though the need to get credit flowing again was one of the main points used in selling the public the bank bailout. But since April, the Big Four banks — JP Morgan/Chase, Citibank, Bank of America, and Wells Fargo — all of which took billions in taxpayer money, have cut lending to businesses by $100 billion.

Meanwhile, America’s Main Street community banks — the vast majority of which avoided the banquet of greed and corruption that created the toxic economic swamp we are still fighting to get ourselves out of — are struggling. Many of them have closed down (or been taken over by the FDIC) over the last 12 months. The government policy of protecting the Too Big and Politically Connected to Fail is badly hurting the small banks, which are having a much harder time competing in the financial marketplace. As a result, a system which was already dangerously concentrated at the top has only become more so.

We talked about the outrage of big, bailed-out banks turning around and spending millions of dollars on lobbying to gut or kill financial reform — including “too big to fail” legislation and regulation of the derivatives that played such a huge part in the meltdown. And as we contrasted that with the efforts of local banks to show that you can both be profitable and have a positive impact on the community, an idea took hold: why don’t we take our money out of these big banks and put them into community banks? And what, we asked ourselves, would happen if lots of people around America decided to do the same thing? Our money has been used to make the system worse — what if we used it to make the system better?

Everyone around the table quickly got excited (granted we are an excitable group), and began tossing out suggestions for how to get this idea circulating.

Eugene, the filmmaker among us, remarked that the contrast between the big banks and the community banks we were talking about was very much like the story in the classic Frank Capra film It’s a Wonderful Life, where community banker George Bailey helps the people of Bedford Falls escape the grip of the rapacious and predatory banker Mr. Potter.

It was a lightbulb moment. And, unlike the vast majority of dinner conversations, the excitement over this idea didn’t end with dessert. It actually led to something — thanks in great part to Eugene and his remarkable team, who got to work and, in record time, created a brilliant, powerful, and inspiring video playing off the It’s a Wonderful Life concept. Watch it below.

Within a few days, the rest of the pieces fell into place, including an agreement with top financial analysts Chris Whalen and Dennis Santiago, who gave us access to their IRA (Institutional Risk Analytics) database. Using this tool, everyone will be able to plug in their zip code and quickly get a list of the small, solvent Main Street banks operating in their community.

The idea is simple: If enough people who have money in one of the big four banks move it into smaller, more local, more traditional community banks, then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it’s meant to be. It’s neither Left nor Right — it’s populism at its best. Consider it a withdrawal tax on the big banks for the negative service they provide by consistently ignoring the public interest. It’s time for Americans to move their money out of these reckless behemoths. And you don’t have to worry, there is zero risk: deposit insurance is just as good at small banks — and unlike the big banks they don’t provide the toxic dividend of derivatives trading in a heads-they-win, tails-we-lose fashion.

Think of the message it will send to Wall Street — and to the White House. That we have had enough of the high-flying, no-limits-casino banking culture that continues to dominate Wall Street and Capitol Hill. That we won’t wait on Washington to act, because we know that Washington has, in fact, been a part of the problem from the start. We simply can’t count on Congress to fix things. We have to do it ourselves — and the big banks are the core of the problem. We need to return to the stable, reliable, people-oriented approach of America’s community banks.

Lynn Parramore at New Deal 2.0:

Just before Christmas, a group of friends were discussing what people could do to stop big banks from running roughshod over America. Among them was Robert Johnson, Director of Financial Reform at the Roosevelt Institute — you know him from his “FinanceSeer” column on New Deal 2.0. The question was raised: could ordinary folks actually help cure a sick financial system?

Rob had an idea. Why not ask people to move their money from a Too Big to Fail institution to a community bank? Why not trust the banks that have been responsible in managing money and supporting the businesses and people around them? Eugene Jarecki, a filmmaker in the group, recalled the beloved holiday classic It’s a Wonderful Life, and within days he put together the video you see here. The editor at the gathering was none other than Arianna Huffington, and she wrote an editorial asking readers to consider leaving the big banks to gamble with their own money–not yours and mine. “Think of the message it will send to Wall Street — and to the White House,” she writes. “That we have had enough of the high-flying, no-limits-casino banking culture that continues to dominate Wall Street and Capitol Hill.”

A new year, a new movement…and there’s even a new website that let’s you search for a responsible bank near you.

Click here to get started and join the movement.

And please pass the word…it’s time to send a message to Wall Street: We the people have had enough.

Adrian Chen at Valley Wag:

The much-vaunted website looks like “My First WordPress Blog” and consists of: The MOVE YOUR MONEY “viral video”; some words about how corporate banks are bad; and a search tool to help find trustworthy local banks in your area to which you may MOVE YOUR MONEY.

The search tool is courtesy of Institutional Risk Analytics, which sells reports on bank reliability. According to Huffington and Johnson’s article, HuffPo “reached an agreement with top financial analysts Chris Whalen and Dennis Santiago, who gave us access to their IRA (Institutional Risk Analytics) database.” (Whalen is quoted frequently in HuffPo pages.) As first noted by Shawn Wasson of The News Junkie, the Institutional Risk Analytics link is plugged into an affiliate program. Subscriptions to IRA’s service start at $50 and go up to $500 and if you send them a new customer, they’re “paying 20% net of PayPal fees and COGS content license costs, where applicable, in 2009 on affiliate sales credited to your code.”

So, is this some new revenue stream for Huffington’s site? Whalen tells us HuffPo is will not receive any commission from sales generated by the campaign. “The Huffington investigative fund runs the site. We do not pay them any commissions for any sales that may occur,” Whalen wrote in an email.

So: HuffPo launches this MOVE YOUR MONEY campaign, which is basically a glorified link to Institutional Risk Analytics’ bank reports. Corporate America may or may not come crashing to its knees, but we imagine Institutional Risk Analytics’ website will be getting way more than its average of 476 hits tomorrow.

Felix Salmon:

Should people move their money from the big four commercial banks to smaller community banks? Arianna Huffington is making a big push, but I’ll believe it when I see it: moving banks is hard, and people are lazy.

The one thing I would urge though is that if you are moving your money out of BofA/Chase/Citi/Wells, that you strongly consider not only smaller banks but also local credit unions as a place to move your money to. The moveyourmoney.info website is happy to give me a list of local banks including Mitsubishi UFJ (no one’s idea of a small community bank), but doesn’t list any credit unions at all. Here’s a tool to help you find one. If you’re going to go to the hassle of switching away from the big banks, then at least make sure you’ve explored all the options.

James Joyner:

Now, it happens that none of my family’s money is in the Big Four banks (JP Morgan/Chase, Citibank, Bank of America, and Wells Fargo) that Arianna and her pals hate. We use a regional bank, and international virtual bank, and three different credit unions. But I don’t see what this plan accomplishes.

First off, despite the publicity that the Big Four bailouts received, they’re hardly alone. Indeed, Arianna’s article notes that “America’s Main Street community banks — the vast majority of which avoided the banquet of greed and corruption that created the toxic economic swamp we are still fighting to get ourselves out of — are struggling. Many of them have closed down (or been taken over by the FDIC) over the last 12 months.” Uh, that’s a bailout. And, surely, we haven’t forgotten the Savings and Loan Crisis of the late 1980s, in which hundreds of billions of taxpayer dollars went to bail out S&Ls from bad loans?

Second, we don’t live in Frank Capra’s world. Going to the handy-dandy local bank finder Arianna and her friends created, I see that my choices are one of several branches of two different institutions. But if I wanted to take out a big loan — say, to hire a bunch of struggling journalists to create a right-of-center version of what Josh Marshall has at TPM — I’d have no better luck at Burke and Herbert than at Bank of America. George Bailey doesn’t work at either place and they don’t know me and I don’t know them.

There may well be towns in America small enough that the local banker does indeed know just about everyone. But people in those towns are probably already banking with him, because they’re not big enough for one of the Big Four to bother opening a branch.

So, I’d suggest that you bank where it makes best sense for your needs. How do their fees stack up against the way you bank? Is there a branch located near your home and/or office? What interest rates do they pay on money left in your account? Do you like to make frequent ATM withdrawals? If so, you should look for one with either a ton of branches (i.e., a Big Four) or else one that waves out-of-network fees (e.g., USAA). Do you want to bank electronically? Then the community bank may not be able to accommodate you.

James Kwak at Baseline Scenario:

I think another issue is that while outrage at Wall Street remains high, most people don’t connect the bank in their town with Wall Street, even if it is a branch of Bank of America. When you walk into a Bank of America branch, it doesn’t feel like Wall Street. It doesn’t even really feel evil; it just feels ugly and corporate and inefficient. I suspect it’s still a mystery to many people how mortgages issued by the bank on the corner are connected to CDOs, the housing bubble, and vast trading profits on Wall Street. My hatred of Bank of America is mainly due to the experience I had with them last summer trying to get old bank statements for a client. (I also recently noticed that while there used to be three Bank of America branches in my town–probably because Fleet, which B of A bought in 2004 or so, was itself the merger of three banks–now there is only one.)

That said, I’m all in favor. I recently canceled my Citibank credit card that I had for twelve years (my remaining cards are American Express and U.S. Bank, which isn’t particularly virtuous but at least avoids the big four), and I only have one step left to close my Bank of America account (need to verify that my last direct deposit has switched). I use Greenfield Savings Bank (0.75% on checking, without the hassle of a “reward” checking account) and Peoples Bank (1.5% on savings, and other banks’ ATM fees refunded for checking accounts). (For those in Western Massachusetts, I hear Florence Savings Bank is good too).

Switching banks can also be good for your wallet, since the biggest banks almost always pay the lowest deposit rates (and charge relatively high mortgage rates). I look at Bank Deals when I’m looking for a new account.

UPDATE: Andrew Sullivan

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1 Comment

Filed under Economics, The Crisis

One response to “With Your Mind On Moving Your Money And Moving Your Money On Your Mind

  1. Pingback: What We’ve Built Over This Holiday Weekend « Around The Sphere

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