Move Your Money - restoring trust in the American way

In his State of the Union address last week, President Obama said that our government faces a “deficit of trust” with the American people and that legislators need to end the “deep and corrosive doubts about how Washington works that have been growing for years.” That acknowledgment may have been resonated with Americans more than any other part of his speech. There is a deficit of trust right now, but it isn’t just with Washington. The economic collapse and stagnation is Washington has left Americans feeling disillusioned about our ability to create real reform, as well as one’s ability to find a job, pay for college, or take out a loan. This common anxiety isn’t a partisan issue; it helped Obama get elected president and it has helped Tea Parties recruit thousands. Americans are searching for a way to take control again.

The Move Your Money campaign is a grassroots movement that has been gaining steam in recent months because it targets the source of this anxiety: the big Wall Street Banks. The banks that took the risks, brought our economy to the edge of ruin, had to get bailed out by taxpayers, gave the money to the CEO’s that messed up in the first place, and now have gone right back to being too big, too risky and too greedy. Move Your Money started with the idea that the best way for people to challenge the “too big to fail” banks is simple: don’t do business with them. The best way we can make sure we aren’t held hostage by big banks is to take our money out, and open up new accounts in local community banks and credit unions. The beauty of this is in its simplicity, it’s not only in the nation’s interest for us to take our money out, but it’s in our personal interests as well.

For starters, any objective look at the facts reveals that we’re just as much at the mercy of the big banks as we were before the bailout. Right now there are four major banks in the US, Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo, and between the four of them they control about 40% of all FDIC-insured banking institution deposits. Think about that; 40% of all of the money deposited in American banks is controlled by just four companies! And the most disturbing part about that is that they’re growing; as recently as December 2007 the Big Four control just 32% of the market, and in 2000 they controlled only 21%. Their market share essentially doubled over the course of nine years. If just one of these institutions falters, or takes too many risks, it threatens the entire banking industry, and that in turn threatens our entire economy. We’ve seen the implications of this with the current recession. Our economy simply cannot be structurally stable again until the Big Four have been cut down to size.

Apart from being too big for their own good, these four have shown they’re not interested in being any more sustainable than before the recession. They have already gone back to the same money making schemes that led to the crunch in the first place, and have dished out CEO and other executive bonuses worth billions. For example, at Wells Fargo CEO John Stumpf was paid “as much as $18.4 million for his service in 2009,” and executives received bonuses of as much as $5 million in stock options. Nouriel Roubini, award-winning economist at New York University, said last week, “We are back to business as usual, back to excessive and obscene bonuses, back to risky trading, leverage, and the illusion that bank profits are driven by their own intelligent action.”

In addition to the satisfaction of fighting Wall Street, individuals stand to gain personally from moving their money into a local bank or credit union. As Move Your Money says, “Community banks are more closely connected to the people and businesses who live near them, and they’re more inclined to make loans they know will get paid back. In other words, they have the values that more people would want banks to have.” Community banks offer individuals a more personalized experience, you can literally look the owner in the face when you make a deposit or require a loan. Rates are often as low or lower, and don’t forget about all those free toasters when you open an account. 

What about the argument that smaller banks can’t offer any of the conveniences that big banks allow, like free ATM withdrawals, free check cashing, internet banking, etc? Dennis Santiago with the Move Your Money campaign opened up several new accounts wrote, “What I was actually waiting to confirm was what I already knew. Most community banks contract with vendors that provide the consumer “convenience” services you’d expect from a bank. These services are part of a mature and stable support industry that does most of the under-the-hood stuff for the banking business. This means that — in practical terms — there’s little, if any, loss in quality of service these days between a small and large bank.” So you can count on the same, or close to the same, level of convenience from smaller banks as you do from the Big Four.

Whether you’re a Tea Party member or Dennis Kucinich is your idol this movement has a place for you. Liberals see it a chance to fight back against corporate greed and exploitation that Washington isn’t responding to, and conservatives consider it a way of wielding power as a consumer to disinvest from banks that waste taxpayer money on extravagant bonuses. Members of congress from both sides of the aisle have endorsed the idea, including Congressman Bob Inglis (R-SC) and Congresswoman Jan Schakowsky (D-IL). The Move Your Money campaign isn’t ideological or partisan, it just makes sense.

Move Your Money is growing fast, already community banks across the country say they have felt the impact of the movement. And it’s not just individuals getting in on the action, businesses, churches and local governments are changing the way they bank. A bill is circulating right now through the New Mexico state government that would shift all $2 billion of the states checking account to local banks across the state. The state currently uses Bank of America. Democratic Gubernatorial candidate Bill Bradbury in Oregon has proposed a “Bank of Oregon” that would be a “mechanism by which the state government would deposit money in local banks.” Obama himself proposed in the State of the Union speech that $30 billion dollars from TARP money will be invested back into local banks to help get them loaning again.

As students here in Colorado Springs, how can we affect change on Wall Street in a serious way? The first thing to decide is where you bank. There are lots of good local community banks in our neighborhood (www.moveyourmoney.info has a search tool to find banks near you with at least a B rating from IRA Bank Rating). The top three for our area are First Commercial Bank on Tejon, Bank at Broadmoor on South Tejon, and Colorado Capital Bank on Cascade. That being said, where you bank as a student at CC depends in large part on the relationship Colorado College has with different banks.

Colorado College currently does its banking with Wells Fargo, although there is a re-bidding process planned for next fall. Who the school decides to bank with has a substantial impact on local incentives for where students should put their money. The schools current agreement with Wells Fargo allows for no-fee withdrawals from the ATM in the Worner Center and free check cashing of up to $200 for CC students, staff, and faculty at downtown Wells Fargo locations. Robert Moore, the Vice President for Finance and Administration, says that CC has a “pretty traditional bank relationship,” but that there are factors that require a certain amount of wherewithal from the firm the school uses. “When tuition starts cascading in, that’s a lot of money coming in fast,” said Moore, “We need to be able to move a lot of money quickly.” As well, since the college operates a number of classes outside the U.S. they have to be able to transfer money internationally.

Despite these unique needs, local banks from Colorado Springs and Denver have approached CC and believe they can handle the school’s business, and Moore says the school sees the pros of working with a community bank. Colorado College would likely be one of, if not the, largest customers for a neighborhood bank and would receive the star treatment that comes with that, whereas Wells Fargo deals with many far larger clients. Moore says that the social welfare of whom they bank with is definitely a consideration in the decision process, especially if the rates each bank charges are similar. The school is currently building a “portfolio of needs” for the re-bidding process that local and national banks can compete for.

Where CC banks has serious repercussions for students on campus. It provides the incentives for where students are likely to put their money. Choosing a local bank also offers the potential to invigorate the Colorado Springs community with more money that can cycle through local businesses. So what’s the next thing we can do as students to take on the Big Four banks? Help the institutions we’re involved with choose local banks over banks that are “too big to fail,” and that means CC as well. If the Administration understands that this is a priority for students, they are far more likely to put their money into Colorado and not into corporations that needed to be bailed out, and never learned their lesson. While we’re here at CC, take the opportunity to move your money into a local, community bank, and work to make sure the other institutions, churches, businesses, and schools, that matter to you do too. The Move Your Money campaign offers us the ability to restore the deficit of trust Americans feel toward the economy and the government, and it does so because it means the change we seek doesn’t come from somewhere out there, it comes from us.