OWS: November 5 is "Bank Transfer Day"

[zach]

Even with most credit unions closed for Columbus Day there was plenty of online buzz, and uncertainty, about what the credit union industry role might be on “Bank Transfer Day,” the latest event surfacing from the “Occupy Wall Street” protests.

Industry sources, speaking off the record, suggested any wholesale switch from large banks to CUs on Nov. 5, the day designated by one Californian and carried atwitter Monday, could conceivably put net worth ratios out of whack.

The balance sheet problem was raised by several industry officials as a potential hazard as online articles focused on what “Occupy” supporters are calling now for a specific action to underscore their complaints against big banks and corporate “greed.”

For the record, Mark Wolff, CUNA senior vice president-communications, said only that the trade group welcomes the idea of “a viral 'Bank Transfer Day'” since it shows “just how angry consumers are becoming with their treatment by big banks” and will now look at CUs.

https://www.commondreams.org/sites/commondreams.org/files/imagecache/headline_image/article_images/bank_transfer_day.jpg

[cont'd at hxxp://www.commondreams.org/headline/2011/10/10-9#.TpNFD4PuDgA.facebook]

This could be interesting if it was carried out on a mass scale and the "99%" actually did this en masse.

[muh_roads]

Something that could actually force the powers that be to listen. This would have a much greater impact than banging drums in the streets. If you actually want hurt them directly this would work.

[oyarde]

I bought a truck about eleven days ago . Have three local credit unions , so I got the loan through one of them.

[linusPAULing]

[cont'd at hxxp://www.commondreams.org/headline/2011/10/10-9#.TpNFD4PuDgA.facebook]

This could be interesting if it was carried out on a mass scale and the "99%" actually did this en masse.

It wouldn't take but 5% of all account holders to have an effect. This is an intriguing idea!

[cindy25]

I don't think this should include all banks, only the biggest.

most small banks are not Fed members anyway

[Kylie]

Already have my cash in the local CU.

This would surely put a dent in the big banks, if not fail them. Don't know if that's the right thing to do going into a winter season, but we will see.

[CaptUSA]

I'm willing to bet that there will be little impact here. I would say that they are over-estimating the size of the bank accounts of those participating in the OWS.

[linusPAULing]

I'm willing to bet that there will be little impact here. I would say that they are over-estimating the size of the bank accounts of those participating in the OWS.

The movement could go viral, reaching beyond the protesters on the street, in which case it would have an impact. Perhaps that's a possibility depending on how pissed off people are and how well the movement is advertised.

If I had my money in BOA I wouldn't wait to November 5th!

[Seraphim]

Exactly.

All it takes is roughly 4-8% of account totals (not just # of accounts, but the actual % of dollars held by the bank) to drop them to their knees. The exact % depends, of course, on the banks leverage.



It wouldn't take but 5% of all account holders to have an effect. This is an intriguing idea!

[matt0611]

I think everyone should just take all their money out of the banks and go cash only, lets decrease the money supply baby! :)

[ItsTime]

I am so glad that we did not have a moneybomb on this day.

[ravedown]

ive sent the article about this to some lib friends and they love it- seems to be a pretty effective bi-partisan idea. i imagine the MSM will love this story-until their big bank advertisers tell them to clam up.

[celestineB]

Despite increased oversight of the banking community by the Consumer Financial Protection Bureau and legislation like the Durbin Amendment, Occupy Wall Street points out that banks will still be generating gross profits off the backs of consumers who can ill afford financial gouging. To put Bank of America’s numbers into perspective, without the $5 monthly debit card fee per customer, the institution would turn an estimated $3.3 billion in annual profit off its 59 million customers’ debit card transactions.

[celestineB]

Critics of Occupy Wall Street claimed the protest was missing focus, and Occupy Wall Street has responded, reports The Street. The focus is now “Bank Transfer Day,” where customers can transfer their cash out of large banks in what would prove to be a more potent form of demonstration against the establishment. Occupy Wall Street introduces Bank Transfer Day (http://personalmoneynetwork.com/moneyblog/2011/10/12/bank-transfer-day-nov-5/) where customers of banking monoliths are being encouraged to withdraw all funds, close their accounts and move to smaller banks and credit unions.

[american.swan]

Would the percentage of customers match or exceed the money businesses put into banks? What if businesses didn't move accounts? Wouldn't a far larger portion of average customers have get their money out for it to have far reaching effects?

[anaconda]

They stole our "Remember the 5th of November" slogan. Wow, those 6500 transfers are gonna send shock waves through the banking system.:rolleyes:

[nobody's_hero]

It's a good idea, but not only would everyone have to do it, we'd also have to have a banking system that actually relied on deposits to make loans.

Which we do not have. So . . .

I will say that I switched to a credit union long ago and have been happier for it.


They stole our "Remember the 5th of November" slogan. Wow, those 6500 transfers are gonna send shock waves through the banking system.:rolleyes:

It wasn't exactly original when we came up with it.

[vita3]

This is a very good practical idea.

[nobody's_hero]

This is a very good practical idea.

I have to admit I'm a bit surprised, as this is perhaps the most 'free market' tactic we've heard from OWS.

[1836]

I don't think this should include all banks, only the biggest.

most small banks are not Fed members anyway

Exactly right, can't misplace the anger.

[Kludge]

Interesting, for sure, and I recall it being talked about here sporadically a couple years ago. Banks are typically on the brink of insolvency in "normal operations" -- the loans (deposits) they get from bank members keep them afloat. IIRC, they need something like 10% extra on top of liability amounts to be backed up by deposits & assets. That capital req. % is probably off, and I'm sure there're plenty of technical nuances which'd shift the numbers in this example around - but for the point's sake, let's assume it's a flat 10% over liability amount needing to be backed up with deposits & liquid assets.

Bank has $2k liquid assets, $98k deposits, $90k loaned out (or in investments - and let's assume they make 7% on average from those loans, 1% on liquid assets, and pay 2% average on deposits, pay 2% of the deposit amount for overhead, and 1.5% of loans are written off each year). So, they're paying ~$4k on deposits (including overhead), earning $6.3k on loans & assets, and writing off $1.35k in loans per year, for profit of $950/yr.

Take $10k from the bank's deposits and they need to quickly sell off their investments to other banks at a loss to meet capital requirements. They'd need to sell about $10k of loans to meet capital requirements. Let's assume they take a 10% hit selling that $10k of loans. Their balance sheet would now show $1k assets, $88k deposits, $80k loaned out - ~$3.5k going out for deposit interest & overhead, $5.6k income from loan interest, and writing off $1.2k in loans each year, showing an annual profit of ~$900.

Take another $10k out of deposits... and the bank is now insolvent after selling another $10k in loans at a 10% loss. When bank bail-outs occur, they're effectively turning those loan/investment losses and having the taxpayers buy them so the banks aren't taking a loss when they sell (though when this has happened, it's been because the loans/investments lost a dramatic amount of value since purchase, not because people took massive amounts of deposits out of the bank). Curiously, if operations continued, they'd probably end up rebounding if no further deposits were taken out. Not in this period of time, though... The big banks are often writing off ~3% of their loans annually.

Of course, when capital requirements increase, banks can take major losses. Let's assume banks now could only have 80% of their deposits & assets used for loans/investments, and the bank needed $100k in deposits to loan out $80k (and let's assume they didn't change their interest rates or services). They'd be paying $4k on deposit interest & overhead to earn $5.6k, and $1.2k of loans are being written off, for an annual profit of $400 vs $950 if they only needed 10% of their loans backed up.