Friday, October 28, 2011

remember the fifth of november

from  image used by means of creative commons
Remember to close your account with a big bank that is.

Kristen Christiansen, a gallery owner in LA, has organized tens of thousands of people on Facebook to close their accounts with Too Big To Fail banks  and open accounts with credit unions or small banks on what has been named bank transfer day.

I couldn't be happier.  For a couple of reasons.

Reason one:  I've been a credit union member since 1994.  I belong to Spire Credit Union, formerly Twin City Co-ops Federal Credit Union (you can understand why they had to change the name) and have never once regretted switching over from US Bank.

When I first joined, I was a student at the U of M and looking for a saner way to have access to what little money I had.  I had started an account my freshman year with a bank two blocks from my dorm.  I think the name was Marquette Bank.  They were OK, and my relationship with the bank was uneventful for a year or so, until one day the sign on the front of the bank had changed, and suddenly I was banking with (if I remember right) First Bank.   First of what, I wasn't sure, but I never really found out, because a few months later they were acquired by local giant US Bank, and my branch was closed, so I had to go a mile or so to the east to be able to see a teller.

And what they had done was understaff the remaining branch, so that what had been a short wait at the bank became a waiting marathon of 15 minutes or more each time, with the added bonus of rude and impersonal service.

This was the point when I decided I had to go somewhere else.  That was also about the time when coincidentally someone had told me that credit unions were actually a form of co-op.

At the time I was living in a student cooperative house, with all the wonderful weirdness that comes with that living arrangement.  I had become fascinated with the possibilities of institutions being governed by the people they served, and had started shopping at food co-ops as well, for the quality of the food, as well as for the egalitarian business model.

This was before the internet was a common part of everyday life, so I think I looked in the yellow pages for credit unions, and found one not too much further away than the horrible bank branch that I hadn't chosen in the first place.

The difference was like night and day.  I no longer was charged a monthly 'account maintenance fee'.  (How much work was it really for the bank to maintain my tiny account?  Did the stack of quarters need it's own safe?)  I dealt with friendly tellers, and they were open on Saturdays.  I didn't appreciate it at the time, but later, when a financed a used car purchase, and a mortgage with them, I found out that their rates were lower, and closing costs much more reasonable.

When I closed my US Bank account, a manager took me into his cubicle (the first time anyone in a suit had actually talked to me there) and asked in a friendly way, why was I closing my account- and was there anything they could do to change my mind.  I hesitated, a little bit sheepish, and told him I was joining a credit union, thinking he might laugh, or be dismissive.

"Oh- a credit union."  He seemed almost impressed. "We can't really compete with that" (a surprising admission).  He didn't say much more, and I left with my meager savings. 

Reason two:  My wife and I tried to buy a short-sale duplex from Bank of America about two years ago.  That was, hands down, bar none, the weirdest and probably worst bank-related experience either of us has ever had.

We had been looking for investment property for a while, trying to find a place to put our savings into while the real estate market was still on the affordable side.  Since Gita is exceedingly frugal and a maestro at money-saving, we had a little bit of a nest egg, even though we were only in our thirties.

Gita found a duplex in a good neighborhood of St. Paul and we made a tentative offer.  It was a short sale, but our agent said that he had done short sales before, and though they required some patience, they could be a good deal.

If you're not familiar with short sales, they work like this:  an owner owes more on a house than it is currently appraised at- a common enough occurrence right now- and puts it on the market for what s/he thinks it will sell for.  The bank, however, having a stake in the property that is greater than the selling price, has veto power over the sale, and may require the owner to pay all or part of the difference between the selling price and the remaining amount owed on the mortgage.  Depending on the bank, this can be either a minor or a major impediment to the sale.

Nevertheless, we put in an offer on the duplex a little before Christmas and waited and waited and waited to hear an answer.  Some time in early April, late on a Sunday night, we got an answer.  They had countered, saying they would sell for $10,000 more than we had offered.  We immediately accepted without conditions and our agent delivered the paperwork to them the next day.  Then we waited and waited again.

This is where it became strange.  We assumed that, since they had countered the offer, they were willing to actually sell the house for that price.  It was comparable to what other houses in that condition were selling for, so we thought we'd have a done deal in no time.  That wasn't the case.  Our agent, the seller's agent, and even the woman hired by the seller's agent to stay in touch with the bank, could not reach anyone at Bank of America.  Phone messages weren't answered.  Emails weren't returned.  I wondered if they were really trying, and called a variety of numbers related to BOA in the Minneapolis/ St. Paul area to try to find someone to talk to, but came up with nothing.  Nobody would talk.  Nobody could give me a number of someone who could help.  There were employees at these offices, but none of them would or could tell me anything to shed any light whatsoever on the situation.

Silly me for assuming that a bank would actually want to sell a troubled property to a willing buyer for a price negotiated by the bank itself.   Silly me for assuming that the sale would eventually somehow go through because someone there would actually care about making money.  They are a bank, aren't they?

But no- nobody ever called back, or emailed, or sent a letter.  We went through with the inspection, dropping $400 to inspect a serviceable house that would instead go slowly into foreclosure and decrepitude.  We found out later, that the bank paid both tenants $2000 to move out voluntarily.  One tenant, who had been receiving Section 8 assistance lost her voucher, however, because the bank, as landlord, had not bothered to send back some simple paperwork to the office overseeing the voucher.  As far as we can tell, the house is vacant to this day, almost two years later.

So who gained in this deal?  I'm not sure.  BOA was out at least $4000 to remove the tenants, plus the costs of city taxes, utilities, and vacant property fees, plus the lost revenue on the unpaid mortgage.  The tenants were out of a good place to live, in a very tight rental market.  The previous owner's credit was ruined, even though he had tried to do the responsible thing by doing a short sale, rather than allowing the house to go into foreclosure.  We were out $400 for the inspection.  Our realtor and the seller's realtor wasted a considerable amount of time filling out documents for and making calls and emails to a bank that couldn't be bothered to respond.

Everyone lost.  Everyone, with the exception of Bank of America, was doing what was considered to be the right thing.  We were playing by the rules.  They made an offer, so we thought they actually wanted to do business.  This is how capitalism is supposed to work, no?  A willing buyer and willing seller do business in an environment where banks are prudent allocators of capital.  Except that's not at all what happened.  We all got screwed, and BOA got to keep a non-performing asset on their books.  Our agent surmised that it was so they could get eventually another bailout from the government.

Oh, did I mention that not even a year earlier, BOA had gotten a bucketload of our tax money in a federal bailout?  They did.  And they laid off 30 or 40 thousand (who's counting, really?) employees a few months ago that they apparently didn't need.  I'm not sure where those thousands of employees were when we tried to buy the property, but I'm sure they're even less accessible now.

The reason for this rant: If you have a savings or checking account with a big bank, open an account with a credit union instead.  When you open the account you become a part owner of a bank than actually gives a hoot about you and your money.  For real. You can find a credit union in your area with this link.

You don't need to be a part of a union.  You don't need to work for a large corporation that has its own credit union.  Most metro areas have credit unions that are open to anyone who lives, works or worships in the area.   Spire is one of those, and there are several others in our area that I know of.  The link in the paragraph above found 4 pages of results when I searched for credit unions within 5 miles of me, and the majority were open to anyone living in the TC metropolitan area.

My 17 years with a credit union have been very good.  The tellers at the location I go to now know my name, and one today talked me through the best way to save money on closing costs if we were to refinance our mortgage.  How many banks would do that?

Do something good for yourself.  Save yourself from being gouged with ridiculous fees.  Do something good for the economy too.  Reduce the size of a Too Big to Fail bank.  If the big banks are thinned out a bit, maybe they'll no longer be too big to fail.  Put a little scare in them so they'll respond when real people need them to respond.

That may be asking a lot, but a guy can hope- no?


  1. We belong to a credit union as well.

    What I don't get is why the banks don't want to work with people to adjust the mortgage payments. In most cases, that is all that is needed to prevent foreclosure. You would think they would actually make more money this way, because of interest if nothing else.

  2. This post made me think back and figure out what my CU's name was when I first moved to town. I know I joined it because my new co-workers recommended it, and the regional Big Bank didn't make it particularly easy for me to try to transfer my account from my hometown branch to the Madison I went with the more cooperative and easy option.

  3. I've found that the big banks don't seem motivated to make much of anything easy, especially withdrawing your money. I didn't relate my wife's difficulties with US Bank in the posting, but thought of it later. She opened a small account with them a couple of years ago- with $250 in it or so. The whole amount was gone in a little over a year- she didn't withdraw any- it was all taken in fees! And they were calling her because she 'owed' more in fees, but the account was empty. We went to close that one right away. They were nice enough about it, and gave back some of the money, but we never went back again, and won't ever. We've never been cheated by our credit union. The difference is like night and day. Glad you hear you're banking with one too.

  4. I am proud to be a part of it; yes i did transfer my money to my local CU. I sent back all my junk mails with their paid envelop.

  5. Interesting.

    My wife just took our joint account, our small savings account and her personal account from US Banks and transferred them to Schwab where we have most of our money anyway - I think we had $30k with US Bank maybe 40. We used to just have $15k with them till last year. They changed the fee structure and said we could no longer have automatic overdraft protection unless we became "premium" by bringing in another $25k. We scratched our heads & said... well... I suppose it doesn't matter who has our little emergency slush fund (we keep some money around in a non-retirement account encase we need it) So we transferred it in. The next month we got hit with $150 in fees ?!?!? We went in and said: "What gives? We brought in the $25k because we like overdraft protection. Well... somehow (and I still don't really understand what exactly happened) I went to a music festival and bought a bunch of stuff - CDS, Tshirts etc... I went over and kept spending... three items - lunch, a couple of CDs, and a Ferry-ride between two islands (about ?? $8) Somehow... these three overages generated 6 $25 fees.

    So we asked, "What about the overdraft protection?" Their reply: "Oh, that $25k to get a premium account is "per account". So to make a long story short, we would have had to bring them an eighth of a million dollars to get overdraft on our personal, joint & business accounts. So my wife took the big accounts to Chuckie Schwab. Now that those are set up and functioning, I'm brining my personal account over to them... and then when our personal stuff is all transferred and running I'm going to first Tech Credit Union and taking my business account back there. I should never have left, but I did about a decade ago to simplify things by doing all our banking with one institution.

    People fear what will happen if big American banks fail. Don't. They're bad businesses - plenty of good options for saving and transferring wealth exist in America. These businesses must die as they are no longer competitive. That is the way things happen in a free democratic and capitalistic society.

  6. ... forgot to mention... I do not look forward to the circus that will undoubtedly unfold when I transfer my business account(s) out. That'll be a special little hullaballo. I bet I'll wind up talking with one or two "customer retention specialists" but I don't care. They can make the accounts free. They can wash my car for me, give me tickets to the ballgame and stroke me all they want. The truth is that I dont' trust them anymore. Their robe slipped open long enough for me to see their black shriveled little hearts and I fundamentally don't trust them to safeguard my financial interests anymore. It's bad enough to get dinged on fees for a few small personal checking accounts and have them change their longstanding practices and then materially misrepresent the fees and commitments required to continue receiving services that used to be standard... That's just an irritating inconvenience. But my business is my livelihood and I do not mix my business interests with people or institutions I don't trust... too much at stake.

  7. Good for you- and I mean that! It's interesting to hear others' stories about US Bank. I hope your relationship with Tech CU and Schwab works out better.

    BTW- sounds like you may not be in Minnesota, but our credit union- Spire- has a $80 incentive for opening a new account right now- but they don't screw you over once they've got you like the banks do. Just thought I'd mention.