Along with the Occupy Wall Street movement has grown up a Move Our Money campaign, pushed by a group calling itself the New Bottom Line. It takes off from a brainchild of that great exploiter of unpaid journalistic labor at her eponymous Post, Arianna Huffington. Ariana’s scheme, launched almost two years ago, would have those of us with money in large banks move it to small ones. This touches on foundational populist fantasy: that virtue and size are inversely related.

When Huffington unveiled her scheme, I took advantage of the gadget on her website (the Move Your Money Project) that allowed you to enter your zip code and came back with a suggested list of virtuous, meaning small, banks. I thought I’d look into some of the suggestions that emerged when I entered by home zipcode, 11238. One, the black-owned Carver Federal Savings Bank, is a major financer of the gentrification of predominantly black neighborhoods in Brooklyn and Queens. As those neighborhoods get richer, Carver boasts, it’s partnering with Merrill Lynch (a subsidiary of the Bank of America) to offer wealth management services to the flusher new residents. Another suggestion, Apple Savings Bank, has about three-quarters of its assets in securities like U.S. Treasury bonds, not local loans. They don’t come much bigger than the U.S. Treasury. And a third, New York Community Bank, which even features that precious word in its name, financed a private equity group that bought up a lot of apartment buildings in New York in the hope of squeezing out the rent-regulated tenants and replacing them with more lucrative ones paying market rents. With the real estate bust, the PE firm is having trouble servicing its debts, and the residents of its buildings are suffering as services are cut further.

There’s a fundamental problem with these small-is-beautiful schemes. One, many small banks have more money than they can profitably invest locally. As Barbara Garson showed in her wonderful book, Money Makes the World Go Around, the portion of her book advance she deposited in tiny upstate New York bank was probably lent via the fed funds market to Chase, where it entered the global circuit of capital. This is not at all uncommon. Money is fungible, protean, and highly mobile even when it looks locally rooted. That very mutability is part of what makes money so valuable: it’s the ideal form of general wealth that can instantly be turned into caviar, lodging, Swedish massage, erotic massage, or shares of Google.

The New Bottom Line people are pushing credit unions along with small banks. Many credit unions are fine little enterprises. But they too have the more money than they know what to do with problem. According to the Federal Reserve’s flow of funds accounts, 58% of their assets are in individual loans, mostly for cars and houses. The balance is invested in bank deposits and bonds. The bonds are Treasury and federal agency securities. Again, anything but small and local. And should they get an influx of money, it’s highly likely that most of it will go to these sorts of bonds. In fact, , more than half the growth in credit union assets over the last three years has gone into Treasury and federal agency securities. Less than a quarter went to mortgage loans, and consumer credit (like credit cards and auto loans) have actually declined. There’s no way they could accommodate even a small fraction of our near-$8 trillion in bank deposits without turning to bigtime securities or Merrill Lynch wealth management services.

Getting banks under control is a matter of politics, not individual portfolio allocation decisions. Sure, you may get friendlier service and lower fees from a credit union—but you’re not really doing anything politically transformative by moving the money. Move your money and it’s still money.

http://lbo-news.com/2011/11/08/moving-money-revisited/

The Federal Reserve is out with the flow of funds accounts for the third quarter, its periodic detailed view of the movements of money by instrument and sector. Credit union assets rose 0.9% (not adjusted for inflation) between the second and third quarters. Consumer credit (like credit cards and auto loans) extended to members rose 0.9%, and mortgages by 0.2%. Holdings of federal agency securities, meaning mortgage-backed securities like Ginnie Maes and Freddie Macs, were up almost 2%. Far greater increases were recorded in bank deposits, with checking accounts up by almost 50%, and savings accounts and the like up by almost 5%.

Over the last year, assets are up almost 5%, with mortgages flat and consumer credit down almost 1%. But holdings of Treasury bonds are up 95%, and of mortgage securities, 28%. Checking accounts are up 21%, and savings deposits, 9%.

Since the recession began at the end of 2007, credit union assets are up by 25%. About a quarter of that increase went to home mortgage loans—but over half (55%) went to mortgage-backed securities and 15% to savings deposits elsewhere.

In other words, the credit union is acting as a middle man for unknown banks, and to a lesser extent greasing the conventional mortgage markets. Lending to members is flat to mildly down.

Of course, all this predates the alleged CU boom inspired by Occupy Wall Street. But given their recent behavior, if the hard numbers bear out all the anecdotal supports of billions moved, then the lion’s share of the intake went to Ginnie Mae’s and bank deposits.

You may like the lower fees and more personal service of a credit union, but you’re not really doing anything dramatically political by banking there.

http://lbo-news.com/2011/12/10/credit-union-update/

gyrofry posted:
ain't no such thing as green power, long as that honky got the power to change the color of money

ive been trying to find a more recent speech of his (after his conversion to islam) where he talks about gangs as being makeshift training grounds for nascent revolutionary war. i watched it (on youtube or google or something) a while ago but it seems to have been taken down

babyfinland posted:

gyrofry posted:
ain't no such thing as green power, long as that honky got the power to change the color of money

ive been trying to find a more recent speech of his (after his conversion to islam) where he talks about gangs as being makeshift training grounds for nascent revolutionary war. i watched it (on youtube or google or something) a while ago but it seems to have been taken down

thats a really weird thesis, a lot of the larger gangs became fully corporatised after reagan and don't have any of their predecessors social/community functions

http://online.wsj.com/article/SB10001424053111904060604576572532029526792.html posted:
Credit unions and smaller banks are the most aggressive pursuers of deficiency judgments, a review of court records in several states shows.

At Suncoast Schools Federal Credit Union in Tampa, Jim Simon, manager of loss and risk mitigation, says the institution has a responsibility to its members, and that means trying to recoup losses by going after loan deficiencies. He calls such legal action the credit union's "last arrow in the quiver."

And this is just speculation on my part but I can well imagine that the morality of debt comes more heavily into play in local loan situations.

Groulxsmith posted:
as usual henwood is 100% correct. any financial institution is going to be a surplus/deficit agent and by extension, will end up a participant in the global financial system. when i was a trader dealing with this very thing, small institutions like community banks and credit unions, as well as small public funds (school districts, rural counties, etc.) were almost free money for the big banks; they had no leverage (or expertise) and took just about whatever prices we demanded. it was about as close to actual arbitrage as anything i've really seen.

the notion of a bank or bank-type thing that caps fees and interest rates and avoids more predatory practices might be palatable but it is unavoidably going to be integrated into international finance

but i thought credit unions were fighting the man