The movement to withdraw deposits from the country’s largest banks has made a difference. Between the end of September and November 5, which was designated by some activist groups as Move Your Money Day, $4.5 billion was moved out of Bank of America, Citibank, Chase Bank and other institutions with $10 billion and more in assets. The movement caught fire after Bank of America planned to charge customers using ATMs at points of purchase; in the background was anger about the banks’ failure to lend and about “robo-signing,” the falsification of bankers’ signatures on foreclosure documents.
Some of the money moved in October went into smaller community banks. Much of it was shifted into credit unions. Enrollment in credit unions soared by 650,000 in October, bringing them 50,000 more customers in one month than they garnered in all 2010. One reason: More than 75 percent of credit unions offer unconditional free checking, while only 45 percent of banks do, according to Bankrate.com.
Across the country, people who moved their money are speaking out to explain why. Rachel Broudy, a former Bank of America customer from Jamaica Plain, Mass., said last weekend, “We closed our account today so we could put our money in a local bank that pays taxes and is supportive of the local community.”
(The country’s 20 largest banks, with some 57 percent of deposits, do only 28 percent of the lending for small businesses, while banks with less than $1 billion in assets, which hold only 11 percent of the nation’s deposits, do 34 percent of the small business lending.)
In Santa Clara County, Calif., Mike Fox, founder of a large company that distributes beer, water, Red Bull and other energy drinks, announced last week that he was taking a personal account worth hundreds of thousands and a company credit line worth $4 million out of Bank of America. Fox cited the “egregiousness” of Bank of America in not acting more quickly to modify home mortgages (Bank of America responded to Fox’s action by saying it has modified more home loans than any other lending institution).
And in Seattle, entrepreneur David Meinhert, who runs a cluster of dining and entertainment businesses, said he was moving his accounts “first and foremost because I am sick of the way banks are influencing American politics and crafting rules and legislation that benefits their profits while risking my money and the American economy. I am sick of hearing about their corrupt practices, from laundering money from Mexican drug cartels [see “Money Moves Out,” October 27, 2011] to discriminatory lending practices.
“I also want to know that my money is being used to help local small businesses, and Chase and Bank of America are hoarding their profits instead of reinvesting into the local economy.”
