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You're Still Keeping Your Money in a Big Bank? What's Wrong with You?

We've gotta stop doing business with the enemy.
 
 
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Excuse me, but can I have a word with the 70% of Americans who continuing keeping their money in big banks, like Bank of America, CitiBank, Wells Fargo and such? Come closer. A little closer. I want to be able to give you a well-earned dope-slap while I ask;

WHAT THE HELL's THE MATTER WITH YOU? ARE YOU STUPID!?

Jesus H. Christ, what's it going to take before you people stop doing business with the enemy? You're like abused spouses who are slapped around and slapped around again and again by your big bank and keep crawling back for more. If this behavior didn't hurt the rest of us I'd be delighted to just let you get the shit beat out of you until your big bank bleeds you white. That would be Darwinism at it's most effective.

But, thanks to the fact that 90% of America's household savings are deposited in these big banks means that your self-destructive banking habits are fueling the very financial services juggernauts that have repeatedly devastating the lives, homes, families and savings of average working Americans. And not just once, but time and time and time again.

Are you listening goddamnit!

And why do you do it?

“Ah, well... because...... well, you know... ah, there's a Wells Fargo Branch on Main Street... and... well, it would be such a hassle moving my account to our hometown community bank. You know, new checks and credit cards and such. I don't like my bank at all, but it's just easier to leave it with Wells.”

Is that how you make all your financial decisions? I hope not. I assume when you're about to make a big ticket purchase, like furniture or a new car, you shop around for the best price and quality and service? But when it comes to where you bank all you care about is that the big bank is a quarter mile closer to your home or office or that you parents banked there or that they give you a (usurious interest) credit card? That's it? That's the reason you bank with Tumor Bank of America?

Sucker. No wonder nearly 70% of Americans nearing retirement age have less than $55,000 in savings to retire on.

My god people. Putting your hard-earned money with a big bank is like Mr. & Mrs. Chicken entrusting their chicks to Col. Sanders Prep School.

As it becomes increasingly clear that Congress is not about to pass anything that even resembles comprehensive financial reform, big banks, freshly rejuvenated by $700 billion pints of taxpayer plasma, are positioning themselves for the next round of looting and pillaging. And why not. They made hundreds of billions of dollars off the last round and all they had to endure was a tongue lashing from members of Congress -- after which they savved their wounds with hundreds of million of dollars in "performance bonuses."

So, you ask, what's the alternative? And what will it cost you to switch?

Well, you drive and walk by that solution every day... your local community bank or your local credit union. And it's not going to "cost" you anything. In fact you're likely to come out ahead. Not only do small banks provide exactly the same services as the big banks, but they do so at a lower cost, pay higher returns to depositors and --- are you sitting down?-- they are still making loans to local homebuyers and local small businesses -- even as the big guys you just saved claim they just can't do either right now.

Proof? You want proof? (Can you handle the proof?) If so the Internet is lousy with proof that small banks beat large banks on virtually every single measure. Just do a Google search under "Big banks vs. Small Banks," and you'll have a month's worth of reading on your hands.

AM BESTS business analysts compared the two and take a look for yourself:

Community Bank Advantages Challenge Historical Assumptions

A bank’s size alone can have less to do with its performance, safety and soundness than would be expected, based on A.M. Best’s analysis of data from the Federal Deposit Insurance Corp. and other, qualitative factors. Various operating models carry key advantages and disadvantages, as Best delineated by a threshold of $5 billion in assets between small and large banks.

• Despite common industry perceptions that large commercial banks have greater safety and earnings power than community banks, a bank’s assets don’t necessarily equate to economies of scale, diversification of risk and market power.

• Small community banks generally have smaller scale and less diversification, but their local owner-managers provide stability, and they draw strength from focusing on their local communities and limiting risk.

• Larger institutions historically have tended to take on more leverage and complex risk exposures, and they also may forego diversification to assume concentrated risk in certain regions or in certain products, such as subprime mortgages.

• Relative risk aside, community banks are better capitalized according to certain regulatory capital ratios, including the Tier 1 risk based capital and tangible common equity.

• Community banks are less susceptible to downswings in bank- ing cycles, as shown by more gradual declines in median return on assets and return on equity compared with larger banks.. [Full report with graphs]

Why is this not more widely understood? Well, ask the New York Times or most other large media outlets. They are always way behind the curve when it comes to reporting emerging financial news. Mostly they come along after each crash to explain to us everything they failed to warn of when it would have done some good. But if you look hard enough you can find some stories that support the Best study:

As big banks falter, community banks do fine

Christian Science Monitor | Unlike banks on Wall Street, these smaller banks didn’t invest in risky mortgage-backed securities or complex derivatives....While they account for less than 10 percent of America’s total banking assets, their traditional, values-based approach contains plenty of lessons for their larger Wall Street counterparts, some analysts say.

But there’s another component as well, says William Attridge, president of the Wethersfield, Conn.-based bank: Most community bankers know their customers. “We’re lending to small businesses, and in small businesses the individual is a significant part of that,” he says. “There’s a character component: That means we might make loans that possibly someone else wouldn’t if they just looked at the financials, because we know the individual well and what their resources and talents are. On the other hand, there are probably some [loans] that look good on paper that we wouldn’t make.”

During the Great Depression, there were more than 30,000 banks in the US, and most of them were small. The majority of banks that failed were small, while the few bigger banks that existed weathered the economic turmoil better. Today, the flip side is happening. Four large banks were responsible for half of the $26 billion in losses reported by the banking industry during the fourth quarter of 2008, according to the Federal Deposit Insurance Corp. (FDIC). [Full Story]

Okay, that's enough from me. Get your damn money out of those cancerous leviathan banks and into a local bank or credit union. (If you choose a credit union, by the way, your new credit card will be limited by law to 18% interest.) And you're tired of those BofA checks anyway. Here's a chance to get a new look to your checks.

Oh, and by doing this, you'll be doing your part in returning banking to its roots, keeping local savings working locally, rather than fueling multi-million dollar bonuses and fueling the next financial bullshit-bubble.

We have met the enemy and it is YOU. Now watch this and be ashamed of yourself.


Stephen Pizzo is the author of numerous books, including Inside Job: The Looting of America's Savings and Loans, which was nominated for a Pulitzer.
 
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