You probably know about Huffington Post's Move Your Money campaign. It's been diaried by daveUSA, Below the Beltway, johnmav, and Inspired by Nature.
I watched the Move Your Money movie, then found a local credit union, and am in the process of moving everything over. I don't know what else you could do, after watching such a great little movie.
But that's just me. Freelancer Martha C. White, writing in The Big Money, explains that all of us together don't add up to anything. Resistance is futile. In fact, if we try to resist the big banks, it will only make things worse for us.
White begins,
Arianna Huffington is mad as hell and not going to take it anymore—or doesn’t think you should. Last week she exhorted Americans to yank their money out of big banks and open accounts at community banks instead...This is a great example of...why populist indignation shouldn't drive policy.
Here is why boycotting big banks doesn't make sense (according to White):
1. Resistance Is Futile. You control your deposits, but the Banks control their fees. Banks collect $38.5 billion in overdraft fees, 90% of which is paid by only 10% of their customers. Plus, there are ATM fees, card-swipe fees, and merchant account fees. Although legislation might limit some of those fees, "It's safe to assume that banks will come up with other ways to extract their pound of flesh." In other words, don't bother trying to reduce their deposit-based revenue, because they can simply create new fee-based revenue.
2. You Are Insignificant. Bank of America has a trillion dollars in total deposits, but only $83B (~8.3%) in "transaction accounts" owned by individuals, corporations, and partnerships. White is getting me curious about the other 92% of the bank's deposits -- the ones that matter -- and what those depositors are getting out of this arrangement that we are not. But assuming her numbers are right, the argument is that what we think of as "depositors" are too small to exert any significant influence.
3. You Are Weak. "For the sake of argument," White says, "let's assume that a drop of a few percentage points' worth of deposited funds would make the Big Four take action. What would it take to get there?" Here is her answer: "Changing banks is a real pain in the ass." It's the reason 22% of customers don't change banks, and the rest must have even better reasons. An "unfathomably higher number" than 22% would have to subject themselves to this hassle, a remote prospect in White's view. Myself, I think 22% would actually be a pretty effective statement.
4. What You Do Doesn't Matter. "There's no guarantee that [removing funds] would make banks friendlier. Citi's been bleeding cash for months, and they've become notorious for 29.99 percent credit card interest-rates."
5. There Is No Escape. "Small banks rely on the big ones," for example to handle foreign currency exchanges. "That would cushion any blow the big banks might feel."
6. You Are Insignificant. "But Move Your Money's biggest problem is that the average American bank account has only $4,000 in it...to achieve that 5 percent reduction, you'd need roughly 2.6 million Big Four customers close their accounts."
Reality Check
When I do the Math, as White suggests, I count 72 million American families at $4,000 per family. To me, that's $288B in play, which would get any industry's attention.
When I go to my credit union and open an account and start moving my money, including direct deposits and automatic withdrawals, I find it is NOT a pain in the ass. At least no more difficult than paying taxes, registering to vote, and getting a drivers license. Actually, I enjoyed it a lot more.
As for fee-based revenue, if depositors leave, then the fee-based revenue leaves, too. So each depositor is actually worth twice as much as their deposits, not half as much, like White says.
When I hear people say, "Don't try to influence these big institutions because you're just one person," all I hear is "You're just one vote, and your one vote doesn't make a difference, so don't bother going to the polls."
And I wonder, too, who is advising the writer of White's column. White credits two sources:
The first is Bert Ely, who advises financial institutions that government regulation is bad. Check out his website; I need say no more.
The second is Chris Whalen, whose company created the Move Your Money Community Bank Finder.
That the tool's creator would be assisting a columnist whose advice is not to use the tool tells me either that Whalen didn't provide much assistance to White after all, or perhaps Whalen's customers do not like the tool. Either way, we know what to do, and we know why to do it.
MoveYourMoney's It's a Wonderful Life video is great. Watch it again, and then if still you have any money left that you didn't move, go move that, too. If resistance were really futile, they wouldn't bother to say it.