Put your money where your mouth is

A movement called Move Your Money has garnered a lot of attention since the beginning of the year, including an article in this newspaper (“Move Your Money?” in the January 14 issue.) It calls on the denizens of Main Street to pull their money out of the giant too-big-to-fail banks and put them into their local community banks.

It seems to us that this is an initiative that ought to bring together people across the political spectrum. It’s a way for people to take control of their own destinies and strengthen their own communities. And it’s also a way to restore a working capitalist system to those communities.

All too often, criticism of corporations is conceived as being anti-American, socialist or communist. But we think what has happened to the banking industry, or any industry dominated by members that are too big to fail, is the opposite of capitalism.

Capitalism relies on consequences. Competition is supposed to lead to the best producers of goods and services rising to the top because those who do stupid things fail, and those that do smart things succeed. Eliminate that reward system and you don’t have capitalism any more; you have plutocracy, where the companies that have made enough money to buy influence use their position of power to hold onto it and keep others out. The recent multi-billion dollar bailout for the institutions whose behavior caused the financial meltdown is the result of such a system.

We’ve seen some arguments online scoffing at the Move Your Money initiative on the grounds it won’t hurt big banks much. That may well be true, as long as the Federal Reserve continues to keep interest rates so low that it is essentially lending banks money for free. Household deposits are, in effect, loans to the banks and, in ordinary periods, they cost the banks less than other funding alternatives. But the big banks don’t really need money from us as long as the government is handing the stuff out by the sackful.

But, the main point is not to hurt the big banks but to help ourselves. CNN recently reported that the giant banks that received the most bailout money have actually reduced their volume of loans to small businesses by 4.6 percent in the last seven months, despite the fact that keeping money flowing to Main Street businesses was one of the main justifications for the bailout. By shifting money to community banks, we shift it to entities that are more likely to lend it out, again, in our own backyards.

And unlike the giants, community banks still use good old-fashioned business, mortgage, auto loans and the like as the main ways to deploy their money. By depositing our money with them, we create a recycling system that puts our dollars into local businesses that can use them to grow, hire people and purchase goods and services from other local businesses. Eventually that flow will come back into our own employers’, and our own, pockets. In contrast, for the past couple of decades, national banks have been using our money and other funds to gamble on baroque speculative derivatives that don’t do anybody any good, except the rarified wealthy elite in the investment community itself. President Obama has recently announced his intention to change such risky behavior, but it remains to be seen how successful he will be.

In the meantime, the moveyourmoney.info website (nb: that’s .info, not .org) provides a search mechanism that helps visitors find viable local alternatives just by putting in their zip codes. The search engine shows what community banks in their area have a rating of B or better, as rated by Institutional Risk Analy-tics (IRA). The site also recommends two other websites where you can check out the financial soundness of banks: Bankrate.com and Bauerfinancial.com. Credit unions are another option to consider. You can search for them at www.findacreditunion.com.

A multitude of banks pops up for Sullivan, Wayne and Pike counties when one puts local zip codes in the IRA search engine; indeed, every local bank we entered showed up with a B-or-better rating. We recommend that those of our readers who still bank with one of the giants investigate the information available online for themselves and consider moving at least some of their money closer to home, where it can do us all some good.

This week's poll, below, asks whether or not you plan to move your money to a community bank. In addition, we will be keeping a running tally for the next few months of people who have actually moved their money. If you want to be added to the tally, just click the submit button in the box at the right. In future weeks, the tally box will again be found in the right-hand column of the editorial page, under the letters.

Also in this issue:

• First sign of happiness
• Sullivan County’s user fee fiasco

Dr. Punnybone

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