handful of money
© Unknown
Hey I think the time is right for a palace revolution
but where I live the game to play is compromise solution

-The Rolling Stones.

Most of us have an idea of what a small-town banker should be like. It's George Bailey, the character Jimmy Stewart played in It's a Wonderful Life.

We also have an idea of what a Wall Street "too big to fail" banker might look like. It's Gordon Gekko, the character Michael Douglas played in Wall Street and the sequel, Money Never Sleeps.

Although everyone wants to bank with George and no one wants to bank with Gordon, people keep winding up at Wall Street banks.

According to FDIC data from 2009, 57 percent of bank assets are with the top twenty banks. Thirty-eight percent of bank deposits went to the five largest banks, up dramatically from 1994 when only 13 percent of deposits went to the big five.


Big banks spend big money on advertising. The website Business Insider War Room combed through the annual reports of publicly traded companies and found that JP Morgan Chase spent $2.4 billion on advertising in 2010. Bank of America spent $1.9 billion, and Citigroup spent $1.6 billion.

The billions being spent in advertising would seem to casual observers to be the overwhelming factor in attracting customers, but that doesn't appear to the case.

My friend, New York Times opinion columnist Joe Nocera, wrote an award-winning book, A Piece of the Action. Joe tracked the evolution of personal finance in America, including the credit card and banking industries. He cited research that said people picked their bank primarily because of its convenience to where they live or work. No other feature mattered. Very few consumers shopped for better interest rates, lower fees, or better services.

Little has changed since Nocera wrote his book in 1994. A 2008 Compete.com survey asked 1,600 people who banked online about online and offline activities. The survey found that 52.6 percent gave "convenient location or ATM" as the reason they chose their bank. Less than 20 percent gave bank fees as the reason. And, despite the billions being pumped into advertising, only 6.3 percent said they chose their bank based on that factor. Since Bank of America has 18,000 ATMs and 6,233 branches, more than any other bank, it would make sense that it attracts the most deposits.

Based on the data and history, getting people to move their money from a Wall Street bank to a possibly less-convenient local bank would seem like an uphill challenge. But, at the beginning of 2010, Arianna Huffington and some of her friends decided to take on that challenge by creating the "Move Your Money" project.

According to a December 29, 2009, article that Huffington and economist Rob Johnson wrote for the Huffington Post, the idea arose at a pre-Christmas dinner they attended with political strategist Alexis McGill, filmmaker Eugene Jarecki, and Nick Penniman of the Huffington Post Investigative Fund. The group discussed "what concrete steps individuals could take to help create a better financial system."

They started with a website and a video. It has grown from there. According to Sara Ackerman, coordinator for the Move Your Money project, more than 4 million people moved their money away from Wall Street banks in 2010. Michael Moebs, CEO of the economic research firm Moebs Services, said that between 13 million and 17 million people will move their money from Wall Street to a community bank or credit union by the end of the project's third year (2012).

There are some practical reasons for consumers to move their money. Moebs Services research shows that overdraft fees in 2009 averaged $35 for large banks compared to $25 for small banks. A similar gap existed with bounced check fees and stop-payment orders.

Personal service is another point in favor of small banks. According to J.D. Power and Associates (and quoted on the Move Your Money website), "small banks have consistently rated higher in overall customer satisfaction than their Wall Street counterparts and that gap has only widened in the last few years."

Supporting small business is another benefit that Move Your Money touts. According to FDIC data, 57 percent of bank assets are with the twenty largest banks, but only 28 percent of small-business lending comes from that top twenty. Small banks (defined as under $1 billion in assets) provide 34 percent of the loans, and mid-size banks (assets between $1 billion and $10 billion) provide 20 percent of the loans.

Although data shows that moving money from a Wall Street bank has benefits for the consumer and for Main Street, a primary motivation for the Move Your Money movement is to decrease the power of Wall Street banks and their role in the financial markets.

It took $700 billion in taxpayer money to bail out Wall Street banks in 2008. Most of the losses for Wall Street came from casino-like trading in a financial instrument called derivatives. Few of the losses came from loans, deposits, or services traditionally done by banks.

It was more profitable for big banks to act as gamblers rather than as deposit and lending institutions. The quest for profits, documented in books such as The Big Short: Inside the Doomsday Machine by Michael Lewis and Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System -- and Themselves by Andrew Ross Sorkin, set Wall Street up for a huge crash.

Wall Street banks have not learned much from their 2008 near-death experience. According to a report issued by the U.S. comptroller of the currency, in the fourth quarter of 2010, four of the biggest Wall Street banks held 95 percent of the derivatives for the entire banking industry.

In other words, JP Morgan Chase, Citigroup, Bank of America, and Goldman Sachs have 95 percent of the exposure to losses in the derivatives market. The other 6,349 banks in the United States have 5 percent.

It's stunning to see Wall Street banks go back into a derivatives market after being burned so badly. It's like watching someone jump out of a sixth-floor window, survive the fall, and go up to the eighth floor and try it again.

I want to send Wall Street a wake-up call, as they don't seem to be getting it or particularly appreciative that taxpayers bailed them out.

The best way to send that message is with my dollars. My resources don't add up to what a chairman of a Wall Street bank gets in an annual bonus, but keeping those dollars away from Wall Street is a start.

As more and more people join the Move Your Money movement, it will get Wall Street's attention. It's also an action that everyone can do. My eleven-year-old grandson did it.

Learn more about Move Your Money here
Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award-winning financial columnist and Huffington Post Contributor. He is the author of the book, Wealth Without Wall Street: A Main Street Guide to Making Money, which will be released on September 20. McNay has Master's Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University. McNay is a Quarter Century member of the Million Dollar Round Table and has four professional designations in the financial services.