Economist Robert Johnson, columnist Arianna Huffington and filmmaker Eugene Jarecki, among others, have come up with a new proposal that would allow ordinary people in this country to channel their anger over the Wall Street bailout while also helping invigorate community banking. We speak with Rob Johnson about Move Your Money. [includes rush transcript]
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: It’s no secret that the most powerful banks on Wall Street, the same ones American taxpayers had to bail out, made record profits last year. They have also cut back on the money they are lending, even though the bailout was supposed to get credit flowing again. Meanwhile, community banks on Main Street have either closed down or are barely surviving.
Well, economist Rob Johnson, columnist Arianna Huffington and filmmaker Eugene Jarecki, among others, came up with a new proposal that would allow ordinary people in this country to channel their anger over the bailout while also helping invigorate community banking. They’re asking people to move their money out of the largest banks in the country into local community banks. It’s called “Move Your Money,” and they’re promoting it with a short online video that compares the current situation to the classic Frank Capra film It’s a Wonderful Life, where community banker George Bailey helps the people of Bedford Falls escape the grip of the predatory banker, Mr. Potter.
PA BAILEY: You know, George, I feel that in a small way we’re doing something important, satisfying a fundamental urge...for a man to want his own roof and walls and fireplace.
ERNIE BISHOP: Don’t look now, but there’s something going on over there at the bank, George.
GEORGE BAILEY: I beg of you not to do this thing. If Potter gets a hold of this building and loan, there will never be another decent house built in this town.
SEN. BERNIE SANDERS: Those are not the people who should be asked to pay for this bailout.
REP. MICHAEL CAPUANO: All or most of you engaged in the activities that actually created this crisis.
SEN. BERNIE SANDERS: Bank of America is too big to fail.
SEN. JON TESTER: So what you’re saying is those fourteen are too big to fail.
TIMOTHY GEITHNER: I don’t think, Senator, I want to use those words, but —
HENRY POTTER: Do you put any real pressure on these people of yours to pay those mortgages?
PA BAILEY: Times are hard, Mr. Potter. A lot of these people are out of work.
HENRY POTTER: Well, then foreclose.
PA BAILEY: I can’t do that. These families have children.
HENRY POTTER: They’re not my children.
UNIDENTIFIED: I turned to the person I’ve done business with for several years, and he said, “No problem.”
AP REPORTER: That person was CEO of a community bank. Banks like his have funds to loan, even while the larger banks have slowed or even stopped their lending.
REP. MICHAEL CAPUANO: I don’t have one single penny in any of your banks, not one, because I don’t want my money put into CDOs and credit default swaps and making humungous bonuses.
AMY GOODMAN: An excerpt from the Move Your Money video, available in full at moveyourmoney.info.
For more on their proposal, I’m joined here in New York by one of its initiators: Rob Johnson, former economist at the Senate Banking Committee and the Senate Budget Committee. He’s now the director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute. He also serves on the UN Commission of Experts on Finance and International Monetary Reform.
Welcome to Democracy Now! So, Move Your Money, how did it come about?
ROBERT JOHNSON: Came about at a dinner. Eugene Jarecki, my wife Alexis and Arianna and I were talking about how frustrated people were that there was no legislative reform and there was no — well, you might call “remorse” from the big bankers. So we started to just, how we say, bat the fat about what could be done. And we talked about how in past episodes people had sold stock, and in this episode, you could get people to move their money.
Why would they move their money when they’re happy with their services? Because they can get comparable services locally. Everything is insured by the Federal Deposit Insurance Corporation, up to $250,000. And they could stop this toxic side effect of derivatives lobbying and “too big to fail” lobbying that’s going on by the top five or six banks that —-
AMY GOODMAN: So, name names. Who are you saying people should -— which banks should they pull their money out of? And what banks should they put them into? Tell us what community banks are, but name the ones they should pull out.
ROBERT JOHNSON: Citigroup, JPMorgan Chase, Bank of America, Wells Fargo and, to the extent that it’s asset management, Morgan Stanley and Goldman Sachs. Those are the six that have 97 percent of the derivatives markets. Those are the “too big to fail” institutions, or at least the large subset of the “too big to fail” institutions. But mostly, they’re the ones who are working very hard right now to stop Congress in the Senate from adequately reforming our financial system, which basically means they want to keep playing and making profit and have the taxpayer pick up the bill in the event of another — they hit another banana peel.
AMY GOODMAN: And explain what community banks are.
ROBERT JOHNSON: Community banks are small, regional or very much local institutions. Most of their activities, their lending activities and so forth, relate to the local region or community around which they collect their deposits.
AMY GOODMAN: And how do know if you’re moving your money into a bank that’s not owned by one of the entities you just talked about?
ROBERT JOHNSON: Well, that requires a little bit of research, but we do have friends at Institutional Risk Analytics that’s on this website, moveyourmoney.info, and they have rated all the FDIC call report banks, and they’ve separated out the big banks from the small, or what you might call the behind-the-scenes ownership, and given you a menu. If you plug in your zip code, it gives you a menu of the banks that they rate A or B, which is safe. And like I say, above and beyond that, you have deposit insurance. But those are the local banks that are independently owned, not owned by the big four to six.
AMY GOODMAN: And explain what a local credit union is.
ROBERT JOHNSON: Local credit union is like a cooperative in the local community, where people put their money in and essentially they are the owners of that bank or of that financial institution. It’s not technically a bank.
AMY GOODMAN: I would guess some people might be afraid they’d somehow lose their money, that a lot of banks all over the country failed.
ROBERT JOHNSON: Yes, and yet no one lost any money for deposits under a quarter-million dollars. So I would say, for 95 percent of the population, if you have FDIC insurance at Bank of America or Chase, you also have it at your local community bank.
AMY GOODMAN: The reconfirmation of Ben Bernanke, your thoughts?
ROBERT JOHNSON: My thoughts are that the Fed did not do a good job with regard to preventive medicine, diagnosis of the illness, diagnosis of the extent of the illness that was called our credit crisis. Ben Bernanke, who I know personally, is a very intelligent man, but he’s embedded in a system whose incentives and governance is all about supporting the banks, rather than being focused on supporting the people who they represent.
AMY GOODMAN: What could the federal government do to encourage investment in local banks and community banks?
ROBERT JOHNSON: The federal government could be much tougher in its regulation and much tougher in the rule setting in Congress on these big banks and these “too big to fail” banks. They’re subsidizing them enormously, which gives them a competitive advantage vis-à-vis the small banks. Their profitability is enormous. They can invest in all kinds of networks and other things that make it, well, you must say, easier, more convenient for the consumer on those — with those subsidy profits and with the benefits of their lobbying efforts.
AMY GOODMAN: Do you think President Obama has improved the situation over President Bush, or do you think it’s gotten worse?
ROBERT JOHNSON: I would say it’s roughly the same, with one exception. I do think President Obama is not unmindful or reckless in his perceptions about what’s going on. I think that Bush was somewhat enamored of an unbridled free market fundamentalism that really isn’t based in reality. I don’t think Obama is quite — he’s not delusionary like that.
AMY GOODMAN: Does the awareness translate into better action?
ROBERT JOHNSON: Not particularly.
AMY GOODMAN: Well, Rob Johnson, I want to thank you very much for being with us. Rob Johnson is part of a group that’s telling people to move your money, move it into local community banks. And their website is [moveyourmoney.info].