Wall Street, look out. There’s a consumer-led movement underfoot to move money back to Main Street.
Credit unions have taken notice and are now feeding off the contempt created by the federal taxpayer bailout of the nation’s largest banks, hoping to lure customers who are either upset that not all of their loaned-out taxpayer dollars will be repaid, or with the huge bonuses bank executives are collecting during an economic crisis.
City-County Federal Credit Union in Minnesota launched BankerSpank.com, a parody of the popular “I’m a Mac” TV ads. Seattle Metropolitan Credit Union is giving $20 to new referred members who intentionally leave their bank.
The Huffington Post also has gotten into the act with its campaign, “Move Your Money,” which encourages customers of large Wall Street-beholden banks to switch to the smaller banks and credit unions.
Daniel Mica, CEO of the Credit Union National Association, wrote in the Huffington Post on Jan. 6: “Make a New Year’s resolution to move your money out of big banks? To that I say: Right on! Without question, financial consumers are angry at—and have lost their loyalty to—big banks.”
The trend of consumers moving their bank accounts to community banks and credit unions is difficult to ascertain, as financial institutions generally don’t keep tabs on where money once held by them is being moved to, industry experts say.
Bad publicity for big banks, which have not only accepted bailout money but also raised credit card rates, could be driving the trend, says Brad Beal, CEO of Nevada Federal Credit Union, which gained 17,000 new members in 2009.
“There were those in the public who … thought ‘maybe our local credit unions will serve us better,’” Beal said.
Another reason: Credit unions such as Nevada Federal are “true mutuals,” Beal said, and are beholden to their membership, not investors.
“Profit is not our No. 1 priority,” he said.
Sound financial advice should dictate a consumer’s decision to switch financial institutions, said Elise Brooks, spokeswoman for the Financial Services Roundtable, a trade organization representing the nation’s largest banks, insurance and securities companies.
“Really, it’s easy to attack the large institutions right now,” Brooks said. “I can see why a movement like this [is happening].”
Credit unions didn’t partake in the bailout, but they are as susceptible to an economic recession like other financial institutions. State and federal regulators shut down three credit unions last year in Las Vegas.
Many credit unions boast the same federal protection of their depositors’ money—up to $250,000 in a standard savings or checking account—as their banker counterparts. But in Nevada and a handful of other states, some credit unions, including Silver State Schools, are not federally insured and are instead covered by American Share Insurance, a private, nonprofit insurance company run by the credit unions it insures.
Depending on the financial institution, consumers could end up paying more to switch to a credit union. For instance, while Chase Bank offers free checking and other free services, such as money orders, Nevada Federal’s regular checking account costs $5 per month if there is less than $2,000 in the account, along with charges for checks and money orders.