Home > #OWS, finance, guest post > Vote with your wallet

Vote with your wallet

March 30, 2012

Today we have a guest post from Elizabeth Friedrich, with whom I work on the Credit Union Findr webapp I blogged about here. Cross posted from Beyond the Bailout.

In 2008, America was in shock seeing the stock market crash, the housing market collapse, and a $12.8 trillion-dollar bailout of financial institutions many felt were responsible for the economic crash. We were paralyzed, unable to see past the madness and despair. At first, our national response was minimal. Americans had lost their homes, jobs, everything, and the anger was evident in the national mood. However, from that desperation and pain-came action and movement! People began to organize in order to decide their own fate, not leave it up to the 1% and/or a complacent government. Action came in many forms, marches in streets, letter-writing and media campaigns, peaceful occupation of public spaces, and of course “Move Your Money.”

The Move Your Money Project actually started several years ago, but had not gained significant momentum until last year, when consumers began to voice their anger and outrage at the very largest for-profit financial institutions, who had been bailed-out with billions in tax-payer dollars, and rather than using those funds to expand credit to communities in need, instead sat on this cheap money and tightened their lending standards. With historic low interest rates set and held by the Federal Reserve system, profit margins became slimmer and many banks responded by increasing their fees across the board, much to the ire of many fed-up consumers.  This action was a catalyst to finally moved people to question the role of their so-called trusted financial institutions and on November 5 2011, over 600,000 people moved their money totaling $80 million dollars out of traditional banking institutions into credit unions and community banks across the country. In addition to that single day of action, over the last few years, over 4 million accounts have moved from the nation’s largest Wall Street banks according to Moebs Services, an economic research firm in Lake Bluff, IL. They also project an additional 12 million people will do the same in the next two years.

This mass-exodus from the big banks is by no means accidental and shows the overwhelming, yet untapped energy of the American people who have grown discouraged with a government that was unwilling or unable to enact true, meaningful financial reform. Many of their reasons for this are clear: consumers are looking for ethical practices, re-investment in local communities, fewer fees and more service, and the end of “Too Big to Fail” financial oligopolies. Naturally, people began focusing on credit unions and community development banks, institutions that have the public interest in mind and seek to strengthen local communities. At these community-focused institutions you actually know where you money goes and what is used for.

Convenience over accountability…

Our culture has taught us that convenience is primary tool when making decisions as opposed to accountability and fairness. Just as we make other choices; purchasing food, clothing, and transportation. Convenience is often the factor that carries the most weight in our decisions rather than ethics. This comes with many consequences – often at the expense of the environment and disadvantaged communities. Hopefully, in the future accountability and transparency will be a primary motivation for consumers when making financial decisions.

What to do?

Today we have a choice whether we know it or not. There is a parallel financial industry functioning on the fringe: Community Development Financial Institutions (CDFIs), a national network community development banks, loan funds, and community development credit unions (CDCUs). These are institutions with a primary mission to strengthen vulnerable communities and invest locally. Banks and credit unions are regulated depository institutions; banks by the Federal Deposit Insurance Corporation (FDIC) and credit unions by the National Credit Union Administration (NCUA). Credit unions offer many of the same services as banks: mortgages, car loans, personal loans, small dollar loans, credit cards, savings/checking accounts, international money transfers, Individual Development Accounts (matched-savings accounts), retirement planning, financial literacy education and budgeting, affordable savings and checking accounts, and credit and debit cards with low minimum balances and flexible terms. They are not-for-profit financial institutions created to serve their local communities and members first. Unlike banks, which can serve any customer that walks in the door, credit unions are restricted to specific fields of membership.

This means that consumers have more options than ever with respect to their primary financial institutions, and a major selling-point for many is that the money they deposit in their credit union stays local within the specific field of membership. Rather than profiting shareholders, income earned at a credit union, dividends are returned in different forms from free services to better interest rates or to expand services in the community.

Making the choice to bank at a credit union or a community development bank creates a multiplier effect for the local communities being served, and ultimately in the entire the financial system. When you invest in a community development financial institution you are investing in job creation, building schools, developing housing and financing small businesses.

Some banks may be “too big to fail,” but consumers are waking up and realizing they have a choice where they put their money, and the impact that choice can have in their own communities. Rather than letting too big to fail institutions gamble away their hard-earned cash, people are choosing to exercise their power as consumers and speak with their wallet. In banking this means find the smart, responsible alternative for you, your family and your community, and community development banks and community development credit unions are a logical choice.

Categories: #OWS, finance, guest post
  1. Wendy
    March 30, 2012 at 11:03 am

    I like the message but really flinch whenever I see “vote with your wallet” and/or citizens described merely as consumers, and unfortunately we have both here. We lefties need to come together on the concept that citizenship is NOT equivalent to being a consumer.
    Sorry if I seem to be harping on semantics. But I feel compelled to comment because these are important issues, and we need to fight back against being scaled back from citizens, with rights (and yes, responsibilities) to mere consumers, who are passive and in fact sort of prey.
    Citizens have rights and get to frame the reality we live in, and whether there’s a market and how that market is regulated, and PUBLICLY funded with citizens’ tax dollars. Consumers only get to shop in the resulting market. Citizens get public spaces and resources, like parks, libraries, schools and publicly owned banks (see North Dakota). Spending is most definitely not voting. A purchase decision may count for something, but not all that much, really.
    Cheers for the ultimate message, though. There is some power in moving our money, and putting it to work for our communities rather than enormous bonuses for already-rich rentiers.


  2. Bertie
    March 31, 2012 at 7:42 pm

    per the above commenter I actually do feel like we are a “sort of prey” which makes me so grateful to hear any and all strategies for the empowerment of citizens, including “voting with my wallet”.

    While I agree with the point made regarding framing, if framing is too abstract it can be ineffective, or even intimidating. I really appreciate practical, even though small, suggestions for change because I can just go and implement them personally.

    I did move my money last year and it felt really good. I have also pretty much stopped making any credit card purchases. I’ve now also turned off cookies (with ghostery) as per Cathy’s suggestion. Any I will vote in elections for anyone that appears genuine in opposing our corptocracy/kleptocracy.

    Those are all simple things that anyone can do, whereas people like me are quite unlikely to protest our exploitative system in any overt way (though I so deeply admire those that do).


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