3c hapter - Index of

The Last Real Banker? 71
that interspersed scenes from the Frank Capra classic movie It’s
a Wonderful Life with clips from congressional hearings on the
subprime crisis. The grassroots campaign urges people to move
their money from the megabanks that brought us to the brink of
economic disaster into community banks and credit unions in an
effort to “ re- rig the fi nancial system so that it becomes again the
productive, stable engine for growth it is meant to be.”
Can such a small act be anything more than symbolic? Yes.
Deposits are a core source of funding for community banks and especially
credit unions, allowing them to make more loans. And because
local lending is what they do, your deposits get invested back into
your community—just as George Bailey explained to restive depositors
of the Building & Loan.
As with any local establishment, local banks have a greater
multiplier effect on the immediate economy. In Sonoma County,
California, for example, more than half of the area’s $11.5 billion
in deposits are held at local banks and credit unions. Still, if
10 percent of the money currently in nonlocal banks ($534 million)
were shifted to locally owned institutions, it could generate
up to $4.8 billion in new local lending, fi gures Derek Huntington,
president of Sonoma County GoLocal Cooperative, a business
alliance. 13
Moving your money is also good for your bottom line. Community
banks and credit unions typically offer better interest rates
on savings and checking accounts, while charging lower and fewer
fees than their megapeers. According to a Federal Reserve report
in November 2010, banks with less than $10 billion in assets
paid an average 1.29 percent interest on deposits, compared to
0.8 percent paid by large banks. 14
Credit unions, in particular, offer a good deal. Since they are
nonprofi t cooperatives, their ‘profi ts’ fl ow back to members in
the form of better rates and services. A recent analysis by the Pew
Charitable Trust found that large credit unions offered signifi -
cantly lower annual percentage rates (APRs) on credit cards and
cash advances than large banks. In addition, they charged lower
annual fees, penalty fees, over- limit fees, and late fees—when they
charged them at all. 15