Move your money

December 30, 2009

Arianna Huffington and Rob Johnson are organizing a big bank boycott. They want depositors to take their money out of Too-Big-To-Fail banks and put them in smaller, high quality banks.

They’ve launched a new website and have teamed up with Chris Whalen to give folks other options. Whalen’s firm, Institutional Risk Analytics, has a proprietary system that grades banks using FDIC data. Enter your zip code and Whalen provides a list of high quality banks in your area.

It’s a potentially powerful combination. Huffington has wide reach due to her media ubiquity and popular website. Johnson, once a portfolio manager for George Soros’s Quantum Fund, is a successful veteran of high finance who’s spoken out against the danger of derivatives and will head Soros’ $50 million Institute for New Economic Thinking. Leveraging Whalen’s data means the two can do more than simply ask folks to move their money. They can provide better options.

(You can read more about it in this column published at HuffPo.)

I applaud the effort and plan on taking them up on it. Some of my savings currently reside at a TBTF bank, earning nothing, and I plan to move the account shortly.

When bloggers like me talk about creditors holding banks responsible for the risk they take, that includes bank depositors. If you have deposits in a bank — a CD, checking or savings account, for example — you are a creditor of your bank. Moving your deposits out of banks that benefit from too-big-to-fail guarantees is a tangible way you can protest bailouts.

I do have one small quibble with the Huffington/Johnson site, in particular the YouTube video they’ve produced. The idea that fat cat bankers — “Potter” from It’s a Wonderful Life stands in — are solely responsible for the crisis oversimplifies the issue. Plenty of smaller banks have gotten themselves into trouble with irresponsible lending. FDIC’s problem bank list now stands at 552, composed mainly of smaller banks.That’s 7% of all FDIC insured institutions in case you’re wondering.

It also lets the rest of us off the hook. Without willing investors and an assist from Alan Greenspan’s low rates, big banks couldn’t have inflated the bubble. Yeah, many should have known better. But let’s face it, Wall Street bankers aren’t the only ones that are greedy.

I also worry that big banker baiting could lead to violence if/when the financial sh*t again hits the fan.

But again, that’s a small quibble. Huffington/Johnson/Whalen — all great folks I’ve had the chance to speak with in the past — are spot on with this effort.

What truly separates community bankers from the big boys is that they can fail. If they mess up, they end up in FDIC receivership. If they lose, they pay for their own mistakes. That’s why this effort should hold particular appeal to financial conservatives.

If it weren’t for the moral hazard created by deposit insurance, depositors would flock to banks that lend conservatively. In the meantime, the best thing we can do is take our money out of quasi-public banks like Chase, Citi, Wells, BofA, Ally, et al and move them to banks that operate free of government support.

More at Move Your Money.

Comments

It is an interesting idea and one more way to vote with one’s wallet.

What are the thoughts about credit unions as opposed to banks? There are several more credit unions in my neighborhood than banks; would moving money into these institutions have the same affect? Would it be as safe?

Posted by Craig | Report as abusive
 

I can endorse the sentiment, but the execution is difficult at best, harmful at worst.

Posted by Andrew | Report as abusive
 

Just a CU anecdote, even though mine was (relative to TBTF) conservative, the Chairman (it’s mid-sized) told me the members who were rejected for mortgages went and qualified elsewhere. So these same members are now hurting my CU with credit card and auto loan losses b/c their mortgage (from another bank) is killing them. But even though these are unsecured or secured against a crappy used Honda, at least it’s only a few grand.

Posted by million | Report as abusive
 

I think it is a great idea as long as we also boycott the likes of AIG, GM, and Chrysler. If this logic holds true we should all buy either Ford or Foreign Autos made in the US. I don’t see anyone talking about that. Banks on the same note should boycott anyone that can not afford the home they are trying to buy. No one should be approved for a home loan that is more than 2x their annual pre-tax income. No one should be allowed to have a credit limit on all combined credit cards that is more than 1/20th their annual pre-tax income. Let’s see how that flies after our economy comes to a complete halt and/or someones civil liberties are presumed to be trampled on.

Posted by buddy | Report as abusive
 

I’d be happy to go along with this, but I’m employed by one of the TBTF banks. >.>

 

Sounds like a great idea! Love it.

 

It is a great idea. These huge money center banks in my view are laughing at public protests over their anti social, greedy behavior and ready willingness to shamelessly take bail out money from the government. Ever try to get these banks to correct a mistake on your account. It usually takes them months or longer to do this as well as dozens of phone calls. After all, why should they serve the needs of us peasants when they are the lord of the manor.

Gerry Chasin, Ph.D

Posted by Gerald Chasin | Report as abusive
 

US housing is set to fall more in 2010 as strategic foreclosures, currently 25% of all foreclosures, accelerate. Why stay in a mortgage when all of your neighbors are renting at 1/3 your monthly payment to the bank? Read a wild California foreclosure story at http://storyburn.com

Posted by Deuce | Report as abusive
 

I get that this is intended to protest the bailout, but what is this actually going to achieve? Make these banks go under because you didn’t like the idea of a bailout in the first place? Improve customer service? If this is about the interest rates or customer service, then this is understandable, but making the biggest banks go under would cost a lot of jobs. And while it’s easy to think that you’re sticking it to a bunch of fat cats, what you’re really doing is sticking it to that bank teller who is attempting to support a family on $10 an hour.

Posted by ... | Report as abusive
 

I don’t trust any of those creeps and haven’t for years. I ask Chuck and manage my own money. Cut up your credit cards folks. “Lean” up a little and breathe deeply of the freedom it engenders. Smell the flowers and fuck the TBTF banks and Madoff and all their ilk.

Posted by susan kalish | Report as abusive
 

Through their abject failure of its responsibility to exercise oversight, the 535 members of the Cacophony of Condescending Conceited Clueless Clowns of Congress made this all possible… we truly have the finest government that (lobby) money can buy… and then they have the temerity to blame everyone walking except themselves… shame on them… no, not really, shame on us for keeping them there… dumb is dumber…

 

I gave up on my TBTF bank 10 years ago and went with my local Credit Union. I have not looked back. Got my mortgage for a decent rate with no gimmicks, got an awesome rate on my last car loan; interest at 2 points below the best offer from the dealer or the TBTF bank. I get interest on my no-minimum balance, free checking account with ATM rebates and a decent return on my savings. I get a credit card with no annual fee and a great interest rate. I get outstanding customer service and feel good that the profit they make is reinvested in the LOCAL community. It is win win.

Posted by Mike | Report as abusive
 

At this point, wouldn’t boycotting government saved companies be counterproductive? It would shatter the companies, and mean we dumped all that money into them.

 

old banking business model is over, these guys are turning the game over on its head: http://www.equilcurrency.com

Posted by Jesse Kittredge | Report as abusive
 

What has been completely overlooked (because it would be politically impossible to broach the issue) is that equally culpable for the crisis is not only the bankers who lent when they should not have (particularly for marginal mortgages and consumer credit), but also a nation of consumers and homebuyers that allowed themselves to become over-burdened with debt.

By blaming the bankers, we insult ourselves. It is as though if the banks offer debt, customers have no ability to say no and will take it even if they cannot reasonably expect to pay it back.

This is the flipside of the coin to the bankers and cuts to the heart of the origins of the crisis in US subprime mortgage borrowing and its equivalents around the world.

Posted by RS | Report as abusive
 

To Mitchell (@ Dec 31st 2009, 3:32 am GMT) – your comment is analogous to saying – we spend so much money on bad food. Oh, if we dont eat it, wont it go waste.. Fool, think of what the consequences would be of eating all that food you bought…

Posted by agup | Report as abusive
 

I agree with … All we would be doing in sticking it to the teller who earns 10$ an hour. Another factor, Would the Larger investors who also hold thier money in the bank boy-cot them too? Would it really hurt if a couple thousand people were to boy-cot and move to another bank? Hurting a well established bank would take much more than a mere boy-cot I should imagine. Let alone These banks hold a huge amount of money.Would the federal res not have to start printing money if thousands of the smaller and larger holders were to leave. if the goal is to put these banks under. Not only that. It would influence your mate who has decided to take a lan on his small business around the corner, as well as affecting the larger sectors would it not.
Forgive me I may be wrong. But this is just my understanding

Posted by MattSA | Report as abusive
 

Good point Mitchell, it depends where those injections came from – taxpayers or printed money. I would only move my debt if I can create a ‘one account’ on the other side, i.e. all my debt is packaged at preferential rates. There will be admin costs and properties will have to be revalued, so you could find yourself short in any event. Once in debt, it is very difficult to get out, on the other hand inflation eats up their returns. I would rather see smaller banks consolidate into medium sized entities.

Posted by Casper | Report as abusive
 

Already done!

I couldn’t stand the horrid service and bend-over-grab-your-ankles fees charged by US Bank. So I switched to a local community bank!

I have significant assets and cash flow – they will be happy to have me, and they’ve already saved me hundreds of dollars in BS fees.

It’s a win-win-win – I can stick it to the idiots who nearly bankrupted my country, while saving money and benefiting the local community. What’s not to love?

Posted by Ima Nonimous | Report as abusive
 

Revolution.

Posted by tT | Report as abusive
 

and now for something completely different
read “Neurolink” by M M Buckner for a tale of how much more difficult it will become to change and survive if we just let the TBTF run things their way. Given a medium or small local bank or pensioners’ investment club, local initiatives to do whatever is most needed locally could happen, if only people were not being so completely sucked into depositing all with the TBTF.

Posted by Z131 | Report as abusive
 

If this worked and the four TBTFs lost their business to smaller community banks, then the newly-unemployed $10/hour tellers at the TBTFs could apply for a job at the expanded community banks. It’s not like the work goes away, it just moves to the small community bank.

Posted by million | Report as abusive
 

IS NOT OUR PRESIDENT SOROS DESTROYING US TO THE APPLAUSE OF THOSE WHO ARE FINANCIALLY BENEFITING AND HIS PUPPET OBAMA. KILL THE BABIES OF COURSE, KILL THE UNWASHED AND KILL THE DEMOCRATIC REPUBLIC AND BE SURE TO KILL , ABOVE ALL ,THE CHRISTIANS.

Posted by BETTY FURKA | Report as abusive
 

ALL banks depend on government support. They get …

- access to funds cheaply from the Fed
- the ability to create new money
- limited liability protection
- favorable tort law
- and of course they’re chartered by a government and wouldn’t exist without that permission slip.

If you want to vote with your dollars, and protect them, change them into silver and gold (or other solid commodities such as land), the only real currency available today.

 

Anyone give a thought to what your local bank is going to do with this money?

Posted by Andrew | Report as abusive
 

Why, America just loves witch-hunting. There’s always someone else to blame. If its not the terrorists wielding their weapons of mass destruction, then its their own damn banks. The seeds of both problems were most likely planted by their greed and ignorance in the first place.

It seems like most of Main Street doesn’t even understand that they were the catalysts for their own crisis. Their elected governments created the environment (low interest rates post 9/11 to stimulate the economy), the banks and government-sponsored mortgage organizations provided the new financial instruments and liquidity, but at the end of the day, the people’s greed provided the demand that drove them where they are.
The people’s foolish overconfidence in their long-term financial capacity and false hope of achieving their American Dreams under a temporary low-interest rate environment was the fundamental driver behind the housing bubble.

I don’t understand why anyone wants to boycott the TBTF banks. It’s merely throwing stones at the easiest scapegoat. If the master plan of shifting all your accounts to smaller institutions succeed, it will only result in the rise of new giants under different names. This makes no sense at all.

Let’s see who the people can dream up of blaming for the next incident. They’ll probably blame Obama for the melting polar ice.

Posted by Cayenne | Report as abusive
 

Another absurd post on the economic debacle. It was not fat-cat bankers or plump-kitten bankers that caused the problem. It was the insanely idiotic legislation passed by Congress and even more asinine regulations made by multiple administrations that caused the whole problem.

Posted by vjklander | Report as abusive
 

Fall of the Republic

The first hour of this video if not at least the first 20 minutes is worth watching to encompass some of the things being discussed here….

http://www.youtube.com/watch?v=VebOTc-7s hU

Posted by Ingrid | Report as abusive
 

This wouldn’t hurt the floor-level tellers. When a Bank gives up on a branch, it’s almost always bought by a different bank, staff included.

It also wouldn’t cause those boycotted banks to collapse. But it might make them small enough to fail.

 

Typical liberal garbage. The last people I’m going to be taking ANY advise about what is good for me, my family, or my country are Huffington and Soros. They represent what is WRONG with our society today…..the idea that we are not able to make informed decisions for ourselves and MUST rely on a “protector”….in this case, Huffington and Soros. Of course, we have to follow everything the protector says or else…..right.

These people are the enemy of American culture and is just appealing to the sheep factor in the population!

Posted by KJ | Report as abusive
 

Of course problem loans wouldn’t BE a problem if borrowers fulfilled their contractual obligation to repay them, but let’s ignore that inconvenient fact and just keep blaming the Capitalist pigs for being the greedy ones.

Posted by Debtless | Report as abusive
 

Haha, looks like the site is being overloaded. They need to revamp it if they want to be taken seriously.

I’ve left BoA three years ago after getting fed up with all these excess fees, service charges, crappy service, etc… Went with an online bank, and never looked back!

Posted by MSG | Report as abusive
 

WE can make the difference. It is time to “fire your bank” and put money in your local credit union. I’ve used the Rogue Federal Credit Union (RFCU) since they started in a house on Peach Street in Medford, Oregon back in the early 70’s… They rock!

Last year after getting upset with these banks that were “too big to fail” and had received OUR taxpayer money to bail ‘em out I did some exploration about the RFCU to find out about its investments. I went up to a teller at the Ashland branch of the RFCU and said, “I want to talk to the most important person here” and before the day was over I was on the phone with the credit union’s CEO Gene Pelham. Not long after I was able to interview Mr. Pelham on my radio show at KSKQ here in Ashland, Oregon.

On the Brain Labor Report for March 30, 2009 we interview Gene Pelham, President and CEO of the Rogue Federal Credit Union, a credit union which focuses on Southern Oregon.March 30, 2009 >>> Listen or Download Here: http://ia331427.us.archive.org/1/items/B rainLaborReportMarch30/blr20090330.mp3

Posted by Wes Brain | Report as abusive
 

The website moveyourmoney.info should definitely include credit unions and not just small banks.

Also, look for small banks and credit unions that offer high-yield reward checking accounts which are as free as free checking accounts but offer rates better than an online savings accounts. Just search for “reward checking” at Google.

 

It’s about time that the American people are starting to get things into perspective.

Posted by Catherine M. Ripley-Zent | Report as abusive
 

I have waited for a long time for the American People to realize that our collective power can change anything.
Hopefully the change is good. We can open our own bank, move our money, set up our own healthcare system, return to the gold standard, own and operate our own media, stop wars, kill a program, remove genetically modified food, start a collective business in any field., etc. There are more of us than any one business, government, group or individual. The same way that we are targeted and controlled, we can target and control. The first step is to stick together and stop bashing each other. We don’t have to love one another (I think we should) but we can organize for the common good of the vast majority.
Let us start with move your money. The smaller banks and credit unions will need to hire the workers from the larger banks to handle the increase in business. Great idea!!

Posted by Brenda | Report as abusive
 

Doh, where is the print button?

Posted by Lex | Report as abusive
 

First Federal Bank in Santa Monica, CA was a small, user-friendly community-based bank that was recently ordered sold by the feds. Depositors were protected, but over the past three years investors saw share prices decline from over $60 per share to zilch. (I sold at $58, but I know others who road the stock to the bottom.) The bank had a policy that when real estate loan payments weren’t made, the amount due was simply added onto the pricipal. Ultimately the feds, rightly or wrongly, decided that the numbers associated with the non-performing loans were too great and thus the end of First Federal. It was a much admired local institution with what proved to be a foolish loan policy. Local is not necessarily wise.

Posted by Patrick | Report as abusive
 

A few thousand people who move their money may not have much effect on the irresponsible behavior of big banks, but at least you can be assured that they wont be making arbitrary charges to YOUR account and using your money to make a mess. It’s not just to punish the big banks, but to keep one’s money in places that one can trust that it’s being used responsibly.

 

If you plan on moving away from the “Big Banks” , look over the Credit Unions with easy terms to join. (Some are Very easy to get a account with…)

Ken N.

Posted by Ken N. | Report as abusive
 

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