Americans keep their money away from sharks of Wall Street

The movement against the sharks of Wall Street opened a financial front. Thousands of people close their accounts and transferred money to credit unions and local regional banks. The reason is the policy of the largest banks, regularly raising prices for services. Americans transfer their money to credit unions, opening up hundreds of thousands of new accounts.

The trigger for this action was the decision of Bank of America to charge a $5 monthly fee for the use of debit card.

Earlier, another major U.S. bank Citygroup has introduced a monthly fee of $20 paid by customers in the event that the amount of money in their savings and checking account is less than $15 thousand. The innovation affected users of a basic package of services.

As a result, only in one day of the “Bank Transaction Day” campaign 84 thousand people simultaneously closed their bank accounts.

It all started with a word. A 27-year old resident of Los Angeles Kristen Christian suggested her Facebook friends say “no” to large banks. Perhaps this idea was voiced earlier, but this time around it was heard by thousands of Americans.

Bank of America has already introduced a temporary moratorium on the monthly debit card fee, and other banks followed the suit. Yet, it was not enough to make the passions subside.

According to media reports, Bank of America has already lost nearly 700 thousand clients. Another 90 thousand people expressed their willingness to join the rally on a special Facebook page.

The funds transfer campaign was scheduled for November 5 and was named “Bank Transfer Day.” Regional banks and credit unions were seen to participate in the campaign as they advertise themselves as an alternative to large banks.

Credit unions in the United States mainly deal with consumer loans. Large credit unions perform virtually all kinds of financial transactions, including issuing cards.

This segment has already experienced a wave of massive consolidation. In 1980, there were 17 thousand 350 credit unions in the United States. Now there are approximately 7,300 such organizations.

Total assets of credit unions to date exceed $940 billion. For comparison, in 2007, this number did not exceed $750 billion. 91 million – nearly a third of the U.S. population – are clients of various cooperatives and credit unions built on a principal of mutual credit.

According to the National Association of Credit Unions of the United States, in the past four weeks 650 thousand of new accounts were opened in credit unions, of which approximately four-fifths – as a reaction to the actions of large banks. For comparison, during the full year of 2010, 600 thousand accounts were opened. Over the last month the new credit union savings accounts were supplemented by $4.5 billion.

Large banks primarily suffered reputational damage. But this amount of outflow is not critical. The largest banks in the country are also threatened by large-scale trials.

The National Association of Credit Unions of the United States initiated a case against one of the largest financial corporations in the U.S. – Goldman Sachs Group Inc. The matter of the case is the damage worth over $491 million suffered by five credit unions after they bought securities backed by mortgages and then lost them. The securities were acquired from Goldman Sachs and the Financial Corporation incorrectly informed the customers about the risks of investing, Associated Press reported.

Claims are also filed by clients who during the 2008 crisis have lost the mortgaged real estate. Satisfaction of claims to the Bank of America, Citigroup and other players will result in payments of at least $17 billion.

Anastasia Romasheva

Bigness

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