Community Banks and Credit Unions as Political Protest (w/Poll)

Large banking institutions are coming under fire as they look to recoup losses by hitting their customers in the wallet.

Bank of America is planning a $5 a month fee on its debit cards. Other banks had considered a similar plan, but have backed off as word of the new monthly costs has consumers up in arms, but that does not mean they are abandoning increased bank fees. Citibank, for instance, is planning to charge people $20 a month if they have less than $15,000 in deposits and other banks are increasing their minimum deposit requirements and fees.

It’s understandable, to some degree–as other revenues decline, banks are seeking to build profits on new sources–but also typical of economic and political systems that have lost their way. The banks and financial industry crater the economy in cooperation with large corporations, collect billions in tax revenue (bailout money) from the federal government and consumers are forced to keep a leaky system afloat.

So consumers are taking things into their own hands, as The Huffington Post reports.

A growing number of consumers, having lost patience with bank fees that only seem to spiral upward, are turning to non-profit credit unions for their banking needs. Demand for short-term credit-union loans rose 52 percent in the spring of 2011, according to the National Credit Union Administration.

What’s the difference? Banks are corporations organized around profit. They exist to benefit their shareholders, with consumers coming a distant second. Credit unions, on the other hand, have a different organizing principle. They exist to benefit their members – which also happen to be the consumers. This subtle difference, according to the growing Bank Transfer Day movement, will help shift the balance of power in the financial system away from huge corporations. (Move Your Money is calling for consumers to abandon the big banks for credit unions on Nov. 5.)

It’s an outsized claim, to be sure, but like the divestment campaigns of the 1980s and 1990s and the boycott efforts that pop up periodically, it may cause enough pain to what Matt Taibbi calls the “Too Big To Fail banks” to effect at least minor political change.

If everyone were to start pulling their money out of the worst-offending banks, that would have a profound effect on the markets and may function as a great short-cut to political change. 

Credit unions – and smaller neighborhood banks like , First Constitution, First Bank-NJ, ,  and others – are closer to their customers and more committed to their local communities.

The big banks, while located in many of the same neighborhoods, have other priorities and offer different services. That’s fine, but the distinction is important. Consumers need to understand these differences and make their banking – and political – choices accordingly.