Big bank blowback: religious and political fervor for 'small and local'.

• Author: Hall, Robert
• Position: Marketing Solutions

Religious leaders and pastors from around the country called to say that they, too, were ready to lake their money out of the big banks ... and instead invest according to their values. by putting money into more local and community-based institutions.

--Reverend Jim Wallis, advocate for Move Your Money. Washington Post Jan. 3. 2010

Big government, big business, big unions, big banks--big trouble. In recent weeks we have seen a new chapter unfold--a market movement has erupted against large banks. Thousands of people have taken a pledge to move their money.

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New York City Mayor Mike Bloomberg announced moving $25 million of municipal tax dollars to neighborhood credit unions. A New Mexico state representative proposed legislation to move the state's $1.4 billion dollars from a large bank to local banks and credit unions. The governor expressed support. The liberal Internet newspaper Huffington Post provided a Web site--www.moveyourmoneyinfo--where you can enter your zip code and it will provide a list of local banks, prescreened for soundness by the group Institutional Risk Analytics.

Viral YouTube videos show people closing their accounts at big banks and moving to smaller banks. Endless online testimonials share how cleansed, joyful and morally righteous people feel about making this move. It's somewhere between a liberal civil rights march, a conservative tea party, and a women's rights bra burning. Perhaps "marteabra" captures the spirit of it.

Flight from size

In many respects this flight from bigness is just the next chapter in an ongoing saga I've recorded over its lifecycle. According to the FDIC's Statistics on Depository Institutions Report, in the second quarter of 2009. U.S. banks with less than $10 billion in assets gained 2.35 percent in total deposits while those with more than $10 billion in assets lost 1.28 percent. Transaction accounts were also up 4.18 percent at the smaller institutions while down nearly 3.83 percent at the larger ones. Demand deposits, mortgage loans and other types of lending activity all reflected similar trends.

Regardless of where you come down on this issue and whether this next round catches fire or fizzles, size flight is a force to be reckoned with and is but a part of a larger pattern. Peggy Noonan at The Wall Street Journal says we are living in the age of breakup--of collapsed and collapsing institutions. Over two thirds of polled citizens think we are headed in the...