by Randolph T. Holhut
American Reporter Correspondent
January 17, 2010
WHY REWARD FAT CAT BANKERS? MOVE YOUR MONEY!
DUMMERSTON, Vt. -- Only in America can the people who drove the global economy off a cliff and pushed tens of millions of people into poverty and joblessness get lavishly rewarded for doing so.
During the first nine months of 2009, five of the largest banks that received federal aid - Citigroup, Bank of America, Goldman Sachs, JPMorgan/Chase and Morgan Stanley - together set aside about $90 billion for bonuses and other compensation for their high level staff.
Only in America can these banks - which all took billions in taxpayer money and government guarantees at the height of last year's economic crisis - can use that money not only to pay lavish bonuses to their top staffers, but also to lobby to block Congress from enacting new regulations to prevent future crises.
The four biggest banks in the United States - JP Morgan/Chase, Citigroup, Bank of America, and Wells Fargo - hold half the mortgages in America, control two-thirds of the credit card business and hold 40 percent of all the total deposits in U.S. banks. At the same time, they have cut lending to businesses by $100 billion since April 2009, all the while making record profits and going back to the same high-risk activities that nearly brought down our economy.
Meanwhile, small community banks - most of which avoided the toxic practices of the big financial institutions - are struggling. According the Federal Deposit Insurance Corp.'s Web site, there were 140 bank failures in 2009, compared to just 25 in 2008. Given the current federal policy of protecting the big and politically-connected banks, small banks are having a much harder time competing.
Congress and the Obama Administration have done almost nothing to change this situation, while the Big Four banks - now fattened to the point where they are considered "too big to fail" - are spending hundreds of millions of dollars to prevent reform and re-regulation of the financial industry.
If Washington won't do anything about this, we the people have to.
A campaign has begun called Move Your Money (http://moveyourmoney.info). It was born out of a dinner table conversation a few days before Christmas between Arianna Huffington, owner and publisher of The Huffington Post, financier turned political activist Rob Johnson, political strategist Alexis McGill, filmmaker/author Eugene Jarecki and Nick Penniman of the Huffington Post Investigative Fund.
Using the film "It's A Wonderful Life" and its main character, the small-town banker George Bailey, as their inspiration, they believe our nation can get credit flowing again on Main Street if depositors move their money out of the big Wall Street banks and into community banks. A video made by Jarecki touting the Move Your Money campaign received more than 300,000 views on YouTube in just one week, and major media outlets around the country have reported on the campaign over the past few days.
"The idea is simple," Huffington and Johnson wrote a couple of weeks ago. "If enough people who have money in one of the Big Four 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. It's neither Left nor Right - it's populism at its best. Consider it a withdrawal tax on the big banks for the negative service they provide by consistently ignoring the public interest."
My savings and checking accounts have been in a local credit union for the last 20 years. The mortgage on my house is from a local savings & loan that reinvests 10 percent of its net profits to charitable and community-minded organizations each year. Most communities in the U.S. have similar institutions, run by people who believe in serving the community, not far away shareholders. There is no good reason to put your money anywhere else.
The Move Your Money campaign is not a substitute for a return to the regulatory regime that governed our financial institutions from the New Deal to the Reagan years, but it is a good first step. Consumers can wield a tremendous amount of power by voting with their wallets, and by choosing to support banks, credit unions and savings and loans that support their communities. If enough people do, the big banks that helped to fuel the economic collapse and are now profiting of our tax dollars might be forced to change their ways.
Randolph T. Holhut has been a journalist in New England for nearly 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.