Berkeleyans move their money, and small banks benefit

Gary Bell, CEO of Cooperative Federal Credit Union in Berkeley. Photo: Judith Scherr

On Friday at noon, Mark Coplan waited patiently for his turn to open an account at the Cooperative Center Federal Credit Union on Ashby Avenue. Thirty-eight people did the same on Saturday which was “Move Your Money Day”, also known as “Bank Transfer Day”, a concept promoted by the Occupy Wall Street Movement, and other organizations.

The goal is to get people to transfer their money from large institutions to local banks or credit unions. “Invest in Main Street, Not Wall Street,” is their slogan.

“I want to be able to switch my account from Wells Fargo tomorrow,” said Coplan, spokesperson for the Berkeley Unified School District, but speaking for himself this time. Coplan, who has banked with Wells Fargo since 1984, said pressure on the big banks has already succeeded. Bank of America recently U-turned on plans to charge customers $5 a month in order to use their debit cards. “That’s a direct result of the Occupy Wall Street Movement,” Coplan said.

By closing time on Saturday, Gary Bell, CEO of Cooperative Federal Credit Union, was elated. “Good people are coming back home to the credit union,” he said. “Today a significant message was sent to the banks about the way they handle finances.”

The push to get people to transfer funds began some months before the advent of Occupy Wall Street. The CCFCU has seen a growing number of new accounts over the past few months, according to Marketing Manager Debbie Crowson, who compared October 2010, where there were 106 new accounts to October 2011, with 316 new accounts.

Over at family-owned Mechanics Bank, they’ve had more than a three-fold increase in deposits over the past couple of months, and a ten-fold increase since the beginning of November, said Senior Vice President Rauly Butler on Friday. “We’re slammed,” he said. “People are coming in droves.”

CCFCU Business Lending Manager Byron Phillips pointed out the differences between the credit union and the big banks. The credit union is a not-for-profit, member-owned bank, controlled by an unpaid board of directors that is elected by members. “We don’t answer to shareholders,” Phillips said. “We’re responsible to members and their needs… and we don’t have big fat paychecks and bonuses.”

Credit unions reinvest in the community, and have a more flexible loan policy, Phillips said. They offer small business loans of less than $1 million, generally around $300,000, for equipment or tenant improvements. Borrowers’ credit scores can be lower for loans at the CCFCU than at large banks. This works to the advantage of minority-owned businesses, he said.

According to the Move Your Money Project website, “Smaller banks do disproportionately more small business lending than the big banks. Small businesses, in turn, are the main engine of job growth, accounting for 65% of new jobs.” (Another source of information is Move our Money USA.)

James Garrett, president of the CCFU board of directors, said the credit union supports financial literacy. For example, they sponsor workshops for homeowners in crisis and they have a consultant who works with people on small-business loans.

“This is a place where you can talk to the CEO if you have a problem,” Garrett said. “We provide an alternative to corporate institutions.”

Two years ago, Bonnie Peterson of West Berkeley took her money out of Bank of America where she’d been banking for 35 years. She told Berkeleyside that bailing out the big banks was “unconscionable.” She moved her money to Mechanics Bank, which she characterized as “a home grown community bank.”

Butler, of the 106-year-old Mechanics Bank, said Mechanics’ three Berkeley branches were fully staffed and open beyond the normal 2 p.m. closing time on Saturday to take care of people transferring their accounts.

Bank of America thinks people should keep their money there. “Bank of America continues to be a great place for customers to manage their everyday finances and achieve their savings goals,” Colleen Haggerty, Bank of America spokesperson, said in an e-mail. “We offer customers more choice and convenience, including industry-leading fraud protection, access to thousands of banking centers and ATMs, and the best online and mobile banking, which allow customers to bank on their terms.”

Mark Coplan has his own grievance with Bank of America. He’s been on disability leave for a couple of months and, instead of getting checks from the state, he gets funds that the state deposits in Bank of America, which issues him a debit card. “Bank of America is profiting,” he said as he took his turn to open his new account.

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  • Nora – Lee Voss
  • It’s great to hear about other folks in Berkeley taking part in this.
    I still think the whole tent cities in public parks thing is silly and counter-productive, but moving your money from a BofA/Wells Fargo/Chase/Citigroup bank to a local credit union can really make a difference.

  • Bruce Love

    In the past month, a new reason to move your money out of the Bank of America has come up.

    The BofA Merril Lynch unit was holding $55 trillion in problematic derivatives.   Merrill’s credit rating was downgraded.   The BofA’s retail banking unit credit rating was also downgraded, but not as badly.

    Counter-parties to those derivatives – who are owed money by the bank if certain events occur – were upset about the lower credit rating.  A lower credit rating can trigger contract clauses that require the bank to put up more collateral or make extra or earlier payments.  A lower credit rating can make it harder for counter-parties to sell their positions in these derivatives.  Bank of America appeased them by moving these derivatives into the banking retail unit.

    The problem is that if (when?) the retail unit now becomes insolvent, the counter-parties to those bogus derivatives will get first crack at whatever good reserves are left, and then the FDIC will have to step in to pay back retail deposit accounts.

    The problem is even worse than that because most analysts believe that will easily bankrupt the FDIC meaning that either millions of depositors will lose their money from supposedly insured accounts — or congress will step into bail out those depositors out at taxpayer expense.

    In this way, B of A is up to its old tricks of socializing losses while privatizing gains, toying with the deposits of ordinary people to do so.

    Do you want to let those guys hold your dollar?

    Barry Ritholtz (“The Big Picture”, author of “Bailout Nation”) has a nice overview, drawing heavily on the analysis of Yves Smith (“Naked Capitalism”) but with content from and links to other sources.  The Bloomberg article he links at the top gives a pretty good technical gloss as background for understanding what Smith is talking about.  Ritzholtz, mostly a pretty sober writer, ends on a pretty good rant, quoted here. 

    Stand Up to the Coup

    Bank of America has repeatedly become insolvent due to fraud and risky bets, and repeatedly been bailed out by the government and American people. The government and banks are engineering an age of permanent bailouts for this insolvent, criminal bank (and the other too big to fails).  Remember, this is the same bank that is refusing to let people close their accounts.

    This is yet another joint effort by Washington and Wall Street to screw the American people, and to trample on the rule of law.

    The American people will be stuck in nightmare of a never-ending depression (yes, we are currently in a depression) and fascism (or socialism, if you prefer that term) unless we stand up to the overly-powerful Fed and the too big to fail banks.

  • I got a 404 error when I tried following your link. I think part of your text got caught in the URL.

    Here’s the correct link for folks who are interested:

  • Anonymous

    I’d love to agree but I can’t.  large banks don’t want any more deposits – check out:

    I still think moving to credit unions is a good idea – hopefully credit unions can use the money more effectively – but no one should think that the big banks will mind people doing this.

  • Anonymous

    I agree that BofA is the definition of a zombie bank: beset by bad loans, and as a result overly risk-adverse to the point where it doesn’t make ‘normal’ loans (see my link above about how banks aren’t lending the money they have.

    I suspect the $55 trillion number is a bit misleading – that’s probably the absolute value of all trades, not the amount that is at risk if BofA fails.

  • Anonymous

    We’ve been with Mechanics Bank for many years – they have 3 Berkeley offices (the Shattuck Avenue office also provides currency exchange) and branches in Albany, Kensington & El Cerrito.

    This morning I was in the Solano Avenue branch .. the banker told me they usually close at 2 pm on Saturday … but didn’t finish till 5 pm.


  • Bruce Love

    The amount at risk for the FDIC if BofA fails is hard to know precisely.   Bloomberg puts their total insured deposits at $1.04 trillion.   

    We don’t know how large BofA’s theoretical total exposure from the stanky derivatives is (nobody does!, not even them!) but a reasonable first guess for how much of their insured deposits is at risk is all of it.  

  • Anything that can make even the smallest dent in any organization that’s “too big to fail” helps. But that’s a very interesting article. Thanks for sharing.

  • Alina

    “Socializing losses while privatizing gains” – good summary for the BofA and other toobigtofail business model.  This issue is very upsetting to me.  I don’t understand why/how it is legal.  The taxpayers shoulder the losses, but if they’re ever any gains then the CEOs get bonuses and the shareholders fatten their portfolios.  Very upsetting.  Should be illegal.

  • Alina

    Thanks for the link to the NYT article.  It’s very upsetting to me that the banks are sitting on tons of cash without giving it out (except in CEO bonuses).  From my understanding the feds are keeping the interest rate low in
    order to encourage banks to give loans and spur the economy.  You would think the banks would be more willing to do so – after all it must be in their interest  to see the economy improve.  Oh wait, maybe not.  No need to worry about the economy when taxpayers bail you out no matter what.

  • I gotta get on this bandwagon.  I’m a small biz owner in berkeley and have a significant amount of cash in wellsfargo.  Which small bank / cred union has the best online banking?

  • Anonymous

    I enthusiastically can recommend Mechanics Bank.

  • EBGuy

    Is Bill Pay a free online service?

  • There is much more to be said about the issue of customers leaving banks for credit unions.  Credit unions may not be charging their customers any debit-related fees, but the fees they charge retailers accepting their debit cards are now much higher (83%, to be exact) than what big banks charge.  And these retailers include the convenience store around the corner, not just the big-box retailers.  The reason is that credit unions were exempted from the Durbin Amendment.

    So we should not be losing sight of the issue that got the whole debit-card-fee thing started – the size of the interchange fees. The way I see it, the issue is a very simple one. If a fee charged by one bank to a retailer is considered too high, it should also be considered too high if any other bank charges it to that retailer. I just can’t see it any other way and I can guarantee you that retailers see it exactly the way I do.

  • a friend of mine left Mechanics because of what he said was poor online banking…

  • Anonymous

    Bill Pay is free.  I use it for only a few vendors.

    I’ve found it easiest to set up loan or service payments via lenders/vendors rather than through online banking.  

    Most other expenses are paid using a business or personal credit card.  I download those charges directly into Quicken 2007 (the version which works on Mac 10.6 and lets me print checks).  When I set up Quicken I had it memorize a bunch of transactions, so when when transactions are imported into Quicken, they also have the appropriate category.

    Your friend’s comment about their online banking could be correct.  Mechanics Bank switched to a different online system in the past year, and I found it to be clunky.


  • Anonymous

    When I shop at Looking Glass Photo they prefer that I use a debit card rather than a credit card.  Does that mean it costs them more if someone uses a Credit Union Debit Card (Credit Debit?)


  • Anonymous

    There is a fundamental problem with transferring ones money into a credit union…people complain that the big banks don’t pay their fair share of taxes well guess what ?credit unions are not subject to the same taxes so It kind of defeats the argument against the big banks your money also is not insured to the degree it is with the FDIC. In short it’s not as cut and dry of a decision as some make it out to be.

  • Anonymous

    I switched from Chase to Patelco and I’m thrilled so far.

  • Anonymous

    I don’t understand that. Mechanics Bank’s online service is great. I pay most of my bill through Bill Pay. Once you set up your list of people/organizations it’s simply a matter of putting in the amount you want to pay and clicking a button. And they guarantee delivery of the money by a certain date. I’ve used this for years and have never had a problem.

  • Anonymous

    The Bill Pay function is easy to use.

    I’ve not tried to track expenses using their online system so don’t know how that compares to other banks.


  • Jesse Townley

    They certainly like to tack on fees for pretty much everything, milking consumers for as much $ as possible.

    Isn’t the profit they make on individual accounts mainly from fees, not from the actual deposits, right? My impression is that the big $$ comes from the insanely risky things they do that have nothing to do with individual accounts.

  • Jesse Townley

    CCFCU is alright. Their phone banking is really good. I’ve only used a portion of their on-line services- it’s fine.

  • Eric H.

    Mechanics Bank on-line banking used to be a little kludgy, but they’ve upgraded it and now it’s great.  And free. 
    I’ve been with them for 10 years – great bank, great service.

  • good to hear.  Their website looks nice.  It was several years ago that my friend banked w/ mechanics.

  • Dian

    BofA has the best online banking.

  • Anonymous

    Bruce – to be clear, I’d agree with you on that point… I definitely agree that deposit banks should be separated from casino-style ‘investment’ banks. One of the worst things done in the clinton administration was getting rid of Glass-Steagal.

  • Anonymous

    Alina – agreed. It’s classic ‘zombie bank’ behavior.