Campaigns help credit unions gain steam

11/28/2011

November has seen an influx of big bank customers withdrawing their accounts and transferring to smaller institutions or credit unions (CUs), spurred by multiple movements.

According to the Washington post, big banks are hurting customers by not doing enough to provide home loan modifications that guard against foreclosure, failing to offer adequate small business lending and not paying federal taxes despite receiving a surplus of taxpayer money in federal bailouts.

The initiatives - Move Our Money, Move Your Money and Bank Transfer Day - have united customers looking for more accountable banks with better small business lending practices.

Move Our Money was organized by the New Bottom Line coalition of congregations, community groups and labor unions, with a goal of moving $1 billion from large financial institutions to community banks and credit unions.

Reverend Ryan Bell defends the initiative, stating that "in a way, the banks have divested from our communities." He added that until they decide to invest, religious organizations aren't going to give them money.

Six Los Angeles Christian congregations have already announced their plans to divest $2 million from big banks, while around 100 more leaders from a variety of faiths - Christian, Jewish and Muslim - have pledged to move an additional $100 million.

According to the movement's website, approximately $55 million has been divested as of November 21.

The Move Your Money project, started by Huffington Post co-founder Arianna Huffington two years ago, has picked up steam recently in the wake of other protests.

According to her initial statement regarding the movement, Huffington explains "If enough people who have money in one of the Big Six banks move it into smaller, more local, more traditional community banks, then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it's meant to be."

The third movement, Bank Transfer Day, was the brainchild of Los Angeles gallery owner Kristen Christian. Commencing on November 5, the project aimed, like the other two, to move funds from for-profit banking institutions into local, nonprofit CUs.

According to the San Francisco Chronicle, Christian thought of the idea in early October, shared it with 500 Facebook friends, and it spread from there. BTD attracted more than $80,000 RVSPs, many of whom became fed up following Bank of America's announcement that it would charge its consumers $5 per month for using debit cards at retail locations.

The lobbying seems to have worked, as at least 700,000 people joined credit unions nationwide in the month leading up to BTD - trumping the more than 600,000 total that joined in 2010, the Washington Post adds.

"I believe that the world is witnessing a consumer awakening," Christian said in an email, as quoted by the Chronicle. "Businesses will have to completely rework their structures and practices in order to receive continued support from consumers."

According to USA Today, big banks still carry around 12 times as many loans as CUs, but between March 2009 and 2011, CU business lending increased by 5 percent, according to data from the Federal Deposit Insurance Corporation.

"Businesses are looking for new sources of credit; credit unions are looking for new sources of borrowers," Pat Keefe, a spokesman for the association, told the media outlet. "They're improvising strategies to do business lending."

Recently, CUs have been pushing to lift the 12.25 percent federal regulatory cap on their lending, and have proposed bills in both the Senate and the House of Representatives that would raise the cap to 27 percent.