The following post was contributed by OSEC member Elizabeth K. Friedrich, and does not represent a consensus view of OSEC or Occupy Wall Street. It is cross-posted from View From the Metropole.
During the last few decades, big banks shifted their business model from one that sought the best interest of their customers to one primarily benefiting themselves. This shift manifested in the development of new practices, such as minimum balances for checking and savings, variable interest rates, ATM fees, credit card fees, fraudulent mortgages, synthetic/bundled products, pay day loans and in-access credit, to name only a few. They created these new products and fees to extract as much wealth from their customers and investors as possible, rather than advancing their advertised goal of ‘making customers’ money work & grow.’
This signaled a fundamental philosophical shift in the banking industry, one that can largely be blamed for the financial crisis in 2008. As banks became more and more aggressive in their pursuit of profits, they engaged in riskier and riskier behavior. The resulting crisis plunged the economy into a recession, sending the national unemployment rate above 10%, causing millions of foreclosures, and severely deepening the wealth gap, which pushed millions of middle-class families into poverty.
As a response to the banks and their role in the crisis, over 500,000 Americans decided to move 5 billion dollars out of big banks into credit unions on November 5th, 2011 (Bank Transfer Day). This served as a great example of what Americans can do to change a flawed system- leave and create/join another.
However, despite Bank Transfer Day’s success in 2011, it did not reach the same scale this year. Many Americans believe the economy is better – even growing. They want things to go back to normal; they want stability and long-term security. Unfortunately, banks cannot guarantee this – nor do they want to. Big banks would have to completely re-organize themselves to mitigate future risks and focus on creating stability and security for their customers and the economy.
Big Banks came out of the crisis on top, with bailouts and bonuses, no jail time and no trials, and no one to challenge their authority. What’s important to understand about them is that they have no inherent values or moral code. Their one priority is to make money and try to avoid regulation as much as possible. If they could take more risk and charge their customers more, they would!
Furthermore, with this lack of consequences Big Banks have behaved tyrannically. They control the financial system, the judicial system, and regulatory system. They are able to saturate any market all while claiming to be responsible and customer-driven. Due to our desire to get back to normal and move forward we too easily forget about the crimes they have gotten away with. We do not see the alternatives that are right in front of us: local, community-centered banks, and credit unions.
I think we can take a note from Colonialists during the Revolutionary War. The colonies were tired of being taxed, burdened by the crown’s rules, wants and desires. Colonists were working the farms, discovering the lands and at the same time sacrificing their lives to make Britain richer. (Of course, at the expense of the indigenous peoples who had inhabited the land before the colonists.) However, there is something that story can teach us as we navigate the post-crisis, un-regulated, and corrupted financial system.
Many people who observed and participated in Occupy Wall Street saw it as a global protest movement spanning continents from South America to Asia. For its participants, it represented a global political shift. Occupiers wanted to see changes, in leadership, in the tax system, and in the economic system, changes that would emphasize democracy and equity. They wanted to see reform in the financial system and many moved their money to show the banks their commitment.
Similarly, colonists did not want to answer to a king thousands of miles away that did care about their plight and nor empower them in any way. We can take a lesson from them; the British Empire was a broken system that could not be sustained in the new colonies. They were frustrated because Britain forced them to pay taxes, yet did not give them any representation in the British Parliament. They rallied behind the phrase, “no taxation without representation.” They demanded change when they saw no relief in sight; they revolted. The Colonies wanted independence and they wanted to create a new state where they could work and worship without fear of reprisal.
Revolution can be something that takes place in your heart and mind not always in the streets. One of the most powerful things Americans have is their deposits, savings, and demand for credit. Americans can break their relationships with the banks and engage in a system that revolves around access, accountability, and fairness. We can change the way Big they operate by taking ourselves out of the equation and utilizing community development financial institutions from regional banks to credit unions.
Large banks believe that because they are convenient, they can do what they want. That convenience is the determining factor in a customer’s decision. Americans need to be ok with lack of convenience and over-saturation to discover what other types of banking options there are. Large banks believe they are seen as the only option and that people want easy answers. Only when Americans make demands and call out big banks will they feel pressure to change.
What does breaking your relationship with a big banks do?
- Tells them they cannot conduct business as usual.
- Tells them you do not agree with their business practices, policies, products and services.
- Tells them that what happened in 2008 will not be forgotten or ignored.
Today, I believe Americans have to declare their independence from banker rule by moving their money out just as colonists revolted and declared independence from British rule. What I am suggesting to you is an action that will force open a space for the largest banks to listen to customers-to serve in their best interest. This is not a proposal for class warfare but to understand right now; the banking system does not work for me but against me.
Start by researching your local banks and credit unions:
Elizabeth K. Friedrich