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A Call to Action: Take Back Our Money - Part ??

Persistence.  Persistence.  We have been advocating (here, here and here) that people who are extremely frustrated with financial conglomerates (Citigroup, Bank of America, Chase, Wells Fargo to name a few) and with the situation over the huge taxpayer giveaways the financial conglomerates received to exercise their ability to move their business elsewhere - particularly to a local credit union or local community bank.  Below is more evidence why this Call to Action is still relevant despite the financial conglomerates passing the ‘not too stressful’ stress tests.

JD Power and Associates recently released the results of customer satisfaction survey regarding bank services.  The results were not good for some of the financial conglomerates.  Overall, the survey indicated that people are not happy with their banking services:

Only 35 percent of customers polled said they are highly committed to their retail banks, down from 37 percent in 2008 and 41 percent in 2007.

Ouch.  The biggest losers in the survey - lenders with below-average customer satisfaction: Bank of America and Citibank.  The two biggest recipients of taxpayer/our money with the worst customer satisfaction.  That is priceless.

Higher fees were one of the reasons people surveyed were unhappy with their banking services. 

Rising fees were the main reason that customers switched banks. One in three who changed banks in the last year said they did so because of higher fees, according to the survey, which was released on Tuesday.

The financial conglomerates have imposed record high fees to make up for their complete incompetence which led to the mortgage crisis.  They have increased fees on ATM usage, checking fees and boosting minimum deposits needed to avoid monthly fees.  It is kind of a double whammy for us: they take our money in the form of the bailout and hit us with higher fees on our accounts.

It is time to get even and take back our money.  If we do any business with the financial conglomerates that have received taxpayer money we should close those accounts and open new ones with a local credit union or local independent community bank.  We may get double the satisfaction: sticking it to financial conglomerates and better service and lower fees.

Credit unions offer lower fees and better service than the financial conglomerates.

Credit unions typically trump banks by offering lower interest rates on credit cards, car loans and mortgages. They also pay out higher interest rates on savings and may have reduced or limited fees associated with checking accounts, ATMs and online bank services.

Credit unions provide a much better value than financial conglomerates.  One of the best things about a credit union is that as a depositor we are part owner of the credit union because of the nature of cooperative ownership.  Isn’t capitalism great?

If higher fees can’t convince someone that they should ditch the financial conglomerates then maybe this will: Taxpayers May Lose Out in TARP Payback,  We may not get that return on our investment that proponents of the bailouts were saying.

Americans were promised a reward for rescuing the nation’s banks. In return for all those bailouts, the banks essentially granted stock options to the government — a potential jackpot for taxpayers once the crisis blew over.

These stock warrants that we received as part of the bailout deal are worth some money now that the financial conglomerates “passed” the stress tests.  The financial conglomerates want to buy bank these stock warrants but guess what, the financial conglomerates may not want to give fair market value for these warrants.

Prof. Wilson estimated that the warrants on nearly 300 publicly traded banks, which account for more than 95 percent of the government’s investments, were conservatively worth $2.4 billion to $10.9 billion. Some lawmakers worry that taxpayers will lose out. “Taxpayers were there at a critical moment,” Senator Jack Reed, Democrat of Rhode Island and a member of the banking committee, told The Times. “They should enjoy the upside when these institutions recover.”

The financial conglomerates and their lobbyists will be negotiating and lobbying for favorable repurchase terms for sure.  The Treasury Department has accepted repurchase terms that were very favorable to a bank in the case of Old National Bancorp. Old National repurchased stock warrants for $1.2 million but analysts estimated the warrants to be worth $6.9 million.  That is a lot of money left on the table by the Treasury Department.  Let’s hope that the case of Old National will not be standard that Treasury Department uses if they agree to resell the stock warrants back to the financial conglomerates.

It is time to take action and let our money do the talking.  It is time to close those accounts with financial conglomerates and move our money elsewhere.  We will be glad we did.