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Moving Your Money Can Have a Real Effect on Big Banks
People have asked whether moving your money from your giant bank to a small community bank or credit union will have any real affect on the too big to fails, given that most of their profits come from speculative investments instead of normal banking deposits.
According to the Nation, the answer is yes:
The
cynics either do not understand banking or misunderstand the widespread
public anger. Dennis Santiago, [influential bank-rating firm,
Institutional Risk Analytics'] CEO and managing director, explained
that banks compete fiercely for the "core deposits" provided by
individual and small business accounts--this stable money is their
preferred base for profitable lending. Take away core deposits, and
bankers feel immediate balance-sheet stress. Expand the account base
for community banks, and they gain greater stability and greater
lending power. "Will moving your money have an effect?" Santiago asked.
"And by effect, I don't mean making a momentary political statement. I
mean making a structural difference to the country's financial system.
The answer is yes."
The Nation points out that a wide variety of campaigns to take back power are being launched from diverse sources:
A
campaign launched by faith-based community organizations associated
with the Industrial Areas Foundation identifies sky-high interest rates
on credit cards and other lending as the ancient sin of usury. IAF
groups are asking churches, foundations and local governments to
withdraw funds from the usurious banks that profit by destroying
borrowers. Organized labor, likewise, has launched an aggressive
movement to insist on responsible investing values for the pension-fund
wealth of working people, urging state treasurers and fund managers to
invest for society's interests as well as good returns.
The Nation is right. There are numerous efforts to stand up to the giant banks.
Congresswoman Kaptur advises
her constituents facing foreclosure to demand that the original
mortgage papers be produced. She says that - if the bank can't produce
the mortgage papers - then the homeowner can stay in the house.
Debtors are revolting against exorbitant interest rates and fees and other aggressive tactics by the too big to fail banks. See this, this and this.
Portfolio manager and investment advisor Marshall Auerback argues that a debtor's revolt would be a good thing.
Popular personal finance advisor Suze Orman is highlighting the debtors revolt phenomenon on her national tv show.
What is fueling the debtor's revolt? Economic conditions are obviously
a large part of it. But the fact that the big banks are not abiding by
"free market rules", but are gambling with taxpayers' money on the
taxpayers' dime, is a contributing factor. In other words, many people
apparently feel that the banks aren't playing fair or by the normal
rules of contract, so they shouldn't have to, either.
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Although in principle I agree with the tactic to kick the TBTF banks in the balls, Nadeem Walayat provides a counter argument for why this is not necessarily a good idea, (if anyone else has already posted this link in advance I apologize for riding their coattails).
http://www.marketoracle.co.uk/Article16544.html
Can we have a National Boycott-Paying-Your-Mortgage Month?
No one wants to see the good banks fail. We want to see the criminal, blood-sucking Banking Cartels that are looting the taxpayers FAIL.
The government has made it abudantly clear that any amount of corruption will be tolerated and that they will protect the status quo at all costs. Obama is nothing but TALK, NO ACTION. My parents warned me about that, and I voted for him anyway--what a disappointment.
Moving your money into physical assets and to solid, unlevered community banks is the ONLY way we will effect real change. Make sure you have bought silver and gold coins and lots of supplies in the next year or so.
Or wish you did.
two quick things:
1) I do not know of one single bank in this country who does not want to "get big".....such action can quite possibly create another TBTF somewhere out there
2) What's to stop the TBTFs from using their considerable power/clout to crush these so called community banks?
If you have the means, another option is to find a non-TBTF brokerage for handling Forex, and move your money out of the TBTF banks into forex savings accts, possibly over two or three different currencies. First, this move takes your money out of the US system altogether, making it more difficult for bank failures and Friday afternoon FDIC actions to catch you by surprise. It also gives you the option of arbitrage at the various rates, as long as you're cognizant of exchange fees. Admittedly, you'd probably not want your day-to-day checking acct in Forex, but this gives you a better handle on discretionary funds.
Not as big on buying gold at this stage. Not that I don't think that gold will go up, but it's becoming increasingly difficult to acquire physical gold, and I suspect at the end of the day that gold options without physical in hand will be worthless once the ball finally drops.
average person cant find 2000 bucks .. so this will really change the face of banking lol
If you want to start the revolt, send a donation to Randy Brogden of Oklahoma. He is a secessionist, and has a good chance at becoming the governor of Oklahoma in 2010.
And if he wins, move here. Bring guns and ammo too.
hey dumbass, "affect" is a verb "effect" is a noun. start with a 6th grade education then perhaps we'll listen to you.
Excellent article! I think you guys are getting the idea - my next step in the Debtors Revolt war will organize a complete boycott of all major banks and investment firms. We the people need to finish the job [a truly free market would have done if the government had not bailed out the crooks].
-Ann "Rockerchic" Minch http://www.debtorsrevoltnow.com
ZeroHedge is there any way you could describe to us in detail how removing each account type hurts banks? I'm unaware of the differences between checking and savings and money market accounts. It would give me more satisfaction to know how much each one hurts a TBTF bank. For example a spreadsheet like this:
Account Type, Amount Held, Damage Done To TBTF Balance Sheet Upon Removal
Checking, 1k, 10k
Savings, 1k, 10k
MMA, ...
Credit Card, ...
Debit Card, ...
IRA, ...
Please sate my morbid curiosity.
Account Type, Amount Held, Damage Done To TBTF Balance Sheet Upon Removal
Checking, 1k, 10k
Savings, 1k, 10k
MMA, ... 1k, 10k
Credit Card, ... actually benefits balance sheet. Remember
this is a loan from the bank to you, so if you pay it off, less loans.
This removes *income* from the bank directly, which hurts them in a different way from removing your deposit accounts. They lose fees from merchants. And if you've been paying interest or fees on the credit card, then stopping the borrowing -- paying it all off as soon as possible -- removes that income too.
Debit Card, ... again, removes *income* from the bank (they get fees from merchants).
IRA, ... $1K, $10K.
Please sate my morbid curiosity.
Done. :-)
Why would the IRA hit them for 1k/10k? Isn't that not available for loans? I can see it costing them fees.
Also does direct deposit come into play at all? For example could the banks anticipate direct deposits coming in and somehow loan that money out in advance?
Are checking and savings accounts really the same?
the trading losers, are pension funds, mutual funds, IRA's and 401ks. and retail investors, like me. large amounts of deposits, will make any small bank, much stronger, and facillitate local banking stability
Just don't waste your energy and target one bank eg. JP Morgan. Let's annouce 2010 a YEAR OF JP and then watch, see how much more they can generate from their trading, low, high frequency, goverment handouts and other similar activities. By the way how they all have gains on trading, who's losing? Chinese? English or me?
Better yet, if you are currently with a TBTF bank, move your money to a small bank or credit union, but leave one dollar in your TBTF bank accounts (as long as it is a no fee/no minimum balance account) and request paper statements! There are plenty of sites where you can research the relative safety and soundness of any bank. Punish the banksters!
All very interesting. Mostly somewhat effective. By all means remove your money from the TBTFs. There is no reason to support a system that is cannabilizing our society. But why hoard cash in a safe when more useful investments are possible? Why not hoard Canadian dollars or Swiss Franks?
The last information I had was that it took about $8 in campaign expenditures to change one swing vote. If you are unhappy about your politician then change him. Contribute a vote or ten to the stooge of your choice. Doesn't have to be local, the problem is nationwide. Support your beliefs or rant and rave. Your choice. Or just cry in your beer and let the bar crowd know about it. Which one do you think is more effective?
I thought about this a lot - I dont think moving money is the right way going about this. Think of all the employees working at the lower levels - tellers, clerks, accountants that may little to do with the crisis that's been driven at the upper echelons. Senior Management needs to be made accountable and punished. As it is life is very difficult for lower level employees in the banks (big or small) and I cant see a justification for their lives to be turned upside down.
Many of the jobs at the TBTF have been outsourced to India or other countries. (Citibank's 800 number is staffed by people who cannot tell the difference between "new ATM card" and "new ATM code.") By moving your business to small, locally based banks and credit unions, you will be helping to create customer service jobs in your community. Bank teller jobs will not be lost, merely relocated to locally run institutions.
Its not the responsibility of the populace to look after these peoples jobs, its a twisted argument. Bank Managers, manage banks not the guy in the street. Stop socialising stupidity. When these banks go down the ONLY people who will be responsible are the people who ran them into the ground. No one else.
Um, using this argument is like saying that we should not have destroyed the Wehrmacht in WW2 because of the bad effect it would have had on the foot-soldiers.
Funny how people in business have to resort to this to survive but the best and brightest of wall street manage to get bonuses from bailouts....this is way frigged up!
Raiding the retirement fund to keep your business afloat
Like many business owners these days, Bob and Joyce Stubbe are facing a cash crunch.
Business is slow at AFM Industries, their aerospace tooling shop in Anaheim, Calif., and clients are taking longer than usual to pay. Banks still aren't lending, and Bob Stubbe doesn't want to max out his home equity line of credit, especially now. Nor does he want to lose his business -- Stubbe believes that as the economy recovers, it will too. His last-ditch option? Raid the 401(k).
http://tinyurl.com/yekok9m
We don't know who (among banks) is doing what. Save in TBTFs or small community banks? No safe small banks around here.
If we can get the TAX REVOLT idea moving, NOW you're talking business. Starve the Leviathan before it squeezes us to death.
Leviathan is deadlier than the Vampire Squids.
Done, done, and done.....baby! (2 years ago!) Cash in the safe feels real, real good. It earns the same amount of interest as your bank account does!!
Remember--if you have $500,000 with a bank, the bank is making loans of $10,000,000.
What's worse is that they are probably lending the money to a hedge fund to gamble or using it as regulatory capital to gamble direct through a prop desk.
It blows.
you tell them to buy gold. Not from the Glen Beck schills, but from a real gold source like Apmex.com.....
and silver.
you tell them the truth >>> get out of paper assets cause we are heading right into a tsunami, and the powers that be don't intend to be the ones that suffer. that little bit of "glory" is going to be reserved for the middle classes who will have to "donate their savings and their earnings for the next fifty years if we are to survive......."
I'm all for bringing down the criminal syndicate that masquerades as the Federal Reserve, Treasury, and the Wall Street TBTF banks.
But, what guarantee do I have that my local bank hasn't also been engaging in shenanigans. I have a local credit union that is up to its neck in loans and I live in the sand state of Florida. I used a website to rate the credit union, h/t ZH, and it was only rated two stars. I then looked at its balance sheet and it was highly leveraged with loans, housing, credit card, automobile, etc.
Now, with local banks failing right and left, with even more banks this year expected to fail, and the vast majority of them are the so called "local banks". What do you do when the FDIC steps in and allows some other bank to take over. I have money in a local bank but it is owned by an umbrella corporation out of South Carolina and I have no idea if that shell corporation isn't being run by one of the TBTF's. If Enron taught us anything, its that shell corportations the status quo of the corporate world. Anything to escape liability I guess.
I totally agree with some of the recomendations of thomasjefferson but unless your boss is willing to pay you in gold or silver you need an account to cash your paycheck, unless of course your bosses company writes its checks against a local bank.
Now the question becomes how does the average American that doesn't spend all their time reading ZH which allows that reader to come across excellent tips find that local bank that won't close its doors overnight or is a shell entity of another shell entity.
I think instead of just telling people to pull their money out and put it in a local bank we need a step by step way of finding those local banks that won't collapse overnight or that might be highly leveraged on their own and on the brink of needing to be taken over by the FDIC, which obviously means taken over by the TBTFs.
Remember this has to be easily understood for even the most economically and financially ignorant moron that walks the streets of America, and that's more than you would like to believe. In fact I wouldn't mind reading up on some suggestions on how to find those local banks that aren't fiscally unstable.
You are right that the entire banking system is interwoven and interconnected. If the entire thing collapses then the fed system will collapse too. Credit unions as well. EFTs will fail, debit cards will fail, Fed wire transfers will fail, and ATM machines will be shut down. I suspect even online banking will be either curtailed or stopped altogether. In essence, we will be throwing the baby out with the bathwater.
I maintain two bank accounts. One is with an internet Bank which has 4 stars and pays me 1% on my cash and no fees. My other account is with a TBTF bank but I only keep the minimum there. I immediately EFT any extra cash I have there (after bills are paid) to my internet bank.
I really don't want to see the banking system collapse. That would be horrific and if BAC, JPM, GS, WFC, Chase, Mellon, PNC and others go we all go - back to the stone age.
Anonymous 196035,
I have given this a lot of thought. No one is saying not to have a bank account. Just don't have one at a TBTF bank. Let's say your boss's bank is Chase and that is where the pay check originates. You can always go to Chase, present the pay check, and they will pay you cash. Then take the cash, save some, and deposit the rest in your local bank.
There's always a risk of any bank going under, especially in such an unstable financial system. All you can do is minimize the risks.
I used www.bankrate.com to find a good local bank. You'll need to learn how to read the bank's financial statement but they give you a wealth of information. In conjunction with http://moveyourmoney.info/ you can find a local bank that is close to you and financially sound. I recommend 4 or 5 star banks. This is easy enough for any economically ignorant person to follow.
Here's an example of Sound banks or better in Phoenix, AZ.
http://www.bankrate.com/rates/safe-sound/bank-ratings.aspx?t=cb&i=&r=4&a...
You will see a column that says Financial Statement. Click on the link next to the bank you're interested in. I clicked on the 3rd bank.
http://www.bankrate.com/rates/safe-sound/financial-statements.aspx?fedid...
This bank is at least making money on its assets and equity. Start comparing banks; focus on banks that are profitable. When you like a few go visit them in person. See how their customer service ranks with other banks.
I must emphasize you should find a bank that is privately owned if possible. In my experience they tend to be more conservative because more of the owner's wealth is at stake compared to public banks.
Good luck. This is a grassroots effort.
thomas j.
many TBTF bank wonk cash a payroll check unless you have an account with them. you personally. not the business owner. Bank of america refused to cash a check comeing form them with out charging me $5 because i didn't have an account with them. i still haven't figured out how that legal. I have the right to be payed in full. don't I?
You probably have to bill your employer for the bank fee. Talk to your union representative.
Your local bank could be engaging in shenanigans. Unless you maintain larger than the FDIC coverage, you money is still safe there.
The big difference is if your local bank is engaging in shenanigans they will be taken over by another bank (at least your acounts will). With the TARP banks, they just take money from tax payers. So remove your money from the TARP banks.
It will have a big impact. With fractional reserve lending, this will remove at least 10 times your average on deposit amount their lending capability.
People will be thinking about their IRA contribution for 2009. I have mine in a smaller brokerage and it is self directed. Maybe its a good time to start people thinking about redirecting those funds.
I was able to take a non-taxable 3% interest (to myself) loan against my account. I maxed it out and repositioned the capital. I bunked the contributions while I repay the loan. We'll see in 5 years whether further contributions are even reality based.
Well, the Left is behind this one so TPTB have to put up with it. It's going to be hard for them to blame the normally-reliable "idealist" circuit for threatening the economy with another Great Depression.
The fix for this campaign may be in.
A Vast Left Wing Conspiracy™? Oh, that is double-plus ungood...
Tell me if the banks leverage the money you deposit 10/1, does that mean for every $1 you withdraw you are effecting $10?
Yes, for every $1 you withdraw in cash that reduces the bank's ability to fund $10 worth of loans. Not only that but you reduce the amount of cash they have available to pay expenses.
I amend this to say this is probably a system wide average. Individual banks can be radically lower or higher then this ratio. TBTF is most likely much higher.
thomas j.
MOVING your NONEY Can have a BIG EFFECT on the BANKS----
http://www.zerohedge.com/article/moving-your-money-can-have-real-effect-...
George,
We were discussing on another thread that there is a far more better way to hurt the TBTF banks. Here's my list on the best way for ordinary people to hurt TBTF banks:
1) Withdraw your cash from the TBTF banks and hoard it instead
2) Boycott doing business with the TBTF banks
a) No deposits at TBTF
b) No debit cards or credit cards at TBTF
c) No CD's or savings at TBTF
d) No Retirement accounts at TBTF
e) No loans at TBTF
3) Sell any shares you own of TBTF banks and buy community and regional banks
4) Re-finance your loan through a community bank
5) If you are financially protected with lots of assets, default on your unsecured loans after following item 7
6) If you are threatened with foreclosure ask the TBTF banks for the mortgage paperwork. Most likely they won't have it. Make their lives miserable.
7) Protect your savings by buying gold, not TBTF bank products
8) If you are unable to do any of the above (highly unlikely) pay off your loan quicker, reducing their interest income
End the Fed! Separation of State from Money!
thomas j.
Way to go, thomasjefferson !
Its the new "just say no campaign", say no to TBTF.
Put that in your bonus pool, Banking Bitches.
The only problem I see is how are the politicians going to have enough money for their boob jobs and botox? There will be consequences if there is a serious take down off TBTFs, a few cosmetic surgeons are going to bite the dust along with them.
Excellent! If the stupid Congress isn't doing its job, WE WILL PUNISH THE BANKS. Get your money out of there and send this posting to EVERYBODY you know!
Thanks Nout for your support.
thomas j.
Now we need a list to punish congress.
Boycott Congress also. Best way to get through to those knuckleheads is to ignore them. The second best way is to profit like the banksters and reduce their ability to influence the government. Why do you think the banks short gold high and buy back low? Gold is the least riskiest investment available. Act like the banksters, reduce their profits, while adding to yours.
I like Stewart's ideas on trading. Kudos to him.
http://www.321gold.com/editorials/thomson_s/thomson_s_010510.html
After thinking about the topic another good way to punish Congress is to contact your State legislators and ask them to nullify the following federal laws:
1) National Health Care
2) Federal Gun laws relating to guns produced and used in your state
3) Federal Medical Marijuana laws
4) Real ID Act
5) Any other law that people of your State hate for the federales imposing on them and reducing your liberties
Only the States are a party to the Constitution. It is up to them to enforce the 10th Amendment and provisions of the Constitution. While the Constitution is flawed in many ways this is one of the ways to put the federales back in their box.
thomas j.
Agree: boycott Congress.
Also, if the Nation and Marcy Kaptur are for something, it is probably a bad idea. Jus' sayin', is all.
You cant boycott Congress. Although every has forgotten Congress is We The People. We cannot boycott ourselves but we can ruin it for ourselves.
Most state and local governments are part of the network of thieves. They have been on the fed gravy train for far too long to quit cold turkey. We have to elect independent minded legislators from the local city councils on up.
A voter and taxpayer revolution!
what she could be hinting at is simple...a real revolt. let's face it, the banks took over the government and engineered the biggest theft in history.....
and we will be paying for it generations >>> ongoing crime so to speak.
what is in the offing now is a serious taxpayer revolt. what portion of the federal taxes collected will be spent to pay off the debt incurred since August 08........
the idea is to deduct that amount -- EN MASSE -- from your federal taxes.
and i think the idea is a good one. why should we submit to being robbed, blatantly robbed, by these banks.......and pay for it for years?
why indeed?