Bankers don’t just deal in money. They deal in trust. Depositors need to be able to trust banks, so they can save their money and the bank can lend to those who need it. But what happens when that trust is broken?
In light of recent bank failures such as Washington Mutual and, more locally, Horizon Bank, customers are taking a long hard look at where they keep their money. Some are taking their finances into their own hands and walking them over to credit unions and locally owned community banks looking for better customer service and someone they can trust.
There is even a national campaign called “Move Your Money,” which is designed to inspire depositors to transition their money to credit unions and community banks in protest of a financial system that bails out large banks instead of bolstering smaller ones.
“The government policy of protecting the ‘too big and politically connected to fail’ is badly hurting the small banks, which are having a much harder time competing in the financial marketplace. As a result, a system which was already dangerously concentrated at the top has only become more so,” said Arianna Huffington, owner of The Huffington Post and one of the founders of the Move Your Money movement.
“The thing that we tend to see in a time like this is a real flight to safety.” —Terry Belcoe, president/CEO of North Coast Credit Union and board member of the Washington Credit Union League
People are heeding the word. According to the Washington Credit Union League, Washingtonians are moving their accounts to credit unions en masse, which has led to a 10 percent membership growth in the state’s 119 member-owned financial cooperatives.
“Media reports on problematic banks seemingly have made Washingtonians suspicious of profit-driven financial institutions, especially big Wall Street banks,” said Washington Credit Union League President and CEO John Annaloro. “Ten percent yearly growth was unheard of prior to this extraordinary migration to credit unions.”
Terry Belcoe, president and CEO of North Coast Credit Union in Bellingham and board member of the Washington Credit Union League, said the average growth for credit unions has only been approximately 2 percent annually until recently.
“It has been a period of substantial growth, not only in the number of new members, but also in the amount of business, particularly deposits, being brought in,” Belcoe said. “The thing that we tend to see in a time like this is a real flight to safety.”
One of the main things that separates credit unions from traditional banks is that credit unions are member-owned instead of being owned by a group of investors that pressure a bank to increase their return on investment.
“We don’t have that kind of pressure,” Belcoe said. “We don’t have the incentive to go out and do anything stupid. We get paid to take care of our members’ stuff, not to make them rich.”
Kessa Volland, marketing manager at Whatcom Educational Credit Union (WECU), said in a volatile banking climate, potential members are attracted to WECU’s connection to the community and its members.
“We have been growing like mad for a while, but with the current climate in banking, things are getting out that we are a bit more connected to our membership,” Volland said. “Staying involved in the community keeps us connected to members.”
Volland said credit union members also get to help dictate the direction of the bank by electing the board of directors, which are volunteer positions.
“I think that really keeps us on a good path. There is no reason for them (directors) to want to jack fees up because they do not get a cut of it,” Volland said.
Belcoe said some large banks got themselves into trouble and are using taxpayer dollars and increased transaction fees to shore up their business.
“When you look at a lot of the things that banks got themselves into, it was chasing return. That is what they are there to do, but that is not our goal,” Belcoe said.
Volland said she hopes this is a time when people realize that they can have more of an involvement in their finances.
“They don’t have to be the little guy anymore,” Volland said. “Credit unions exist to serve everyone, especially those with smaller means. The whole idea is to manage things responsibly to help our members save, so that others can borrow responsibly.”