Ditching your big bank is the way to go

Not just because 650,000 consumers have switched to credit unions since September 29, but because the American public is tired of being manhandled by these behemoths of greed.  The latest stupid move by not-to-bright Bank of America was the instigator of this latest rush away from institutions like them, Wells Fargo, Chase and Citibank.  B of A wanted to charge its customers $5 per month to access their own money by using their debit card.  Other banks thought of it, even tested, but decided no.

Even more have deserted the big guys and moved to smaller banks where service is much better, and they are not so greedy.  The bank dumping movement began officially on November 5, prompting another 40,000 to join credit unions.  This, combined with the larger figure is more than credit unions add in a whole year, expressing the ire of consumers in the U.S.  We switched to a smaller bank a couple of years ago, but they have eventually been acquired by BMO Financial Group of Canada.  We’ll see?

Derivatives time bomb

Occupy Wall Street formed “Dump Your Bank Day” which started on November 8.  The Occupy Movement has been very vocal over the big bank menace citing the consolidations going on for 20 years resulting in a concentration of four large banks.  They are JP Morgan, Citibank, Bank of America and Wells Fargo, and they add up to 40 percent of the total assets of the commercial banking system.  On the other hand there is risk involved in their trading of derivatives.  JP Morgan Chase and Citibank combined hold 54 percent of derivatives contracts.

Investopedia defines derivatives as: “A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.” 

The key here is the term “high leverage.”  Companies in that category are considered to be at some financial risk, in some cases bankruptcy.  So on top of everything else, the extra fees and charges by big banks, they could also tank if the derivatives market goes bad.  Both the above banks think their risks are manageable but Davis Paul, Pres. Of Fiscal Strategies Group, isn’t so sure.  He cites “…the corruption of the culture of commercial lending as banks embrace the trading culture that is central to the derivatives world.”



According to Marcy Gordon writing for the Associated Press, “Federal regulators bowed to pressure from big banks seeking a quick exit from the financial bailout program and did not uniformly apply the government's own conditions set for repaying the taxpayer funds.”  Get this; the banks wanted this quick exit so they could avoid any limits on executive’s compensation.  Taxpayers pay for the bailout and these greedy bastards go home with our money.  No wonder Americans are deserting the big banks in droves.

In all fairness to the system, the taxpayer will recoup the $245 billion invested in banks and will make an additional $20 billion in profits.  But it’s just the arrogance of this industry that has galled the American public as they continue to dump the culprits.