Remember, remember bank transfer November

by Leonardo Castaneda

This Nov. 5 will be another Guy Fawkes Day to remember. Dubbed Bank Transfer Day this time around, it marked the culmination of a month-long exodus of fed up customers, going from megabanks to community banks and credit unions.

The movement began Sept. 29, when Bank of America announced a $5 monthly debit fee. It started as an offshoot of the larger Occupy Wall Street movement and caused thousands of customers to flock to their local community banks and credit unions.

In a short period of time this grassroots movement achieved astounding success. During the month of October, 650,000 new customers with $4.5 billion in assets opened accounts at credit unions. That’s a total of 50,000 more new members than all of last year. An additional 40,000 people joined a credit union on Nov. 5. These numbers don’t even take into account the thousands who took their money to small and medium–sized community banks.

Shortly after the movement began, Bank of America recanted its planned debit fee.

As far as Occupy–inspired actions go, money transfers are boring. But what Bank Transfer Day lacks in teargas and human microphones, it makes up for in directness. Simply put, if you don’t like something, don’t support it. If you think megabanks and their Wall Street cronies are greedy and corrupt, don’t give them your money.

If you’re still not convinced about the importance of moving our money out of megabanks, consider how different types of banks handle our money. Megabanks use it to gamble on financial contraptions such as subprime mortgage derivatives. When those gambles inevitably fall through, they demand more of our money in the form of government bailouts.

Credit unions, on the other hand, usually invest in traditionally safe assets and local businesses. Small and midsize banks — credit unions and community banks — hold 25 percent of the national bank wealth, yet they make half of all small business loans. When we move money to local banks we are investing in the local economy, helping small businesses in our own backyard grow.

If you’re not yet convinced, consider this: Smaller and medium sized banks charge far fewer fees than megabanks. Time magazine recently reported that, despite recent megabank consolidations, checking account fees have tripled in the last two decades, to $327 in 2009. Why are supposedly profitable banks charging more for the benefit of holding our money? As Time reported, the answer is they have become too big to manage. This has forced these lumbering institutions to pass along bloated management costs to cardholders.

Financial experts will debate Bank Transfer Day’s impact on megabanks’ pocketbooks. They may argue that the meager savings of the 99 percent can’t put a dent on the institutions of the rich and powerful. However, citizens can make a difference by simply choosing to put their money in a local bank.

However, we cannot allow this to simply be a threat we use whenever banks pass new fees we don’t like. We have to continue moving our money into local banks that will manage carefully and invest locally.

This may not fundamentally alter the way megabanks work, but it will shrink them and their stake in the U.S. economy. By slowly shrinking these banks we take aim at the one protection they had in 2008: They were too big to fail. When we take our money somewhere else we slowly deflate them, so that next time they mismanage themselves to the ground, we can say they’re too small to matter.

Imagine what a financial crisis would be like if community banks and credit unions were the primary source for bank accounts and loans.

Last year the percentage of delinquent, or unpaid, loans reached a worrisome new height, accelerating the collapse of the housing market. The worst increase was in loans held by megabanks, which were more than three times likelier to default than loans held by community banks and credit unions. This is because small and midsized banks, with their understanding of the local economy and culture, often make better loan decisions. Imagine what two-thirds fewer defaults, bankruptcies and foreclosures would mean to our economy.

We don’t have to wait for another Bank Transfer Day to move our money out of the greedy hands of Wall Street and into our local banks.

There are several community banks in San Diego, such as San Diego Trust Bank and Vibra Bank to choose from. San Diego County Credit Union, one of the most important credit unions in the country, is open to everyone working or living in San Diego, Riverside and Orange County. Making a difference can be as simple as going online and opening an account.