Initial reports indicate that some Americans are listening to the media maven. Some, like me, will move money for better interest rates and better customer service (thank you USAA). Others, will do it simply because Arianna says it's a good idea.
The notion of rushing the national banks is very very scary. What would happen if JP Morgan lost 50% of its deposits? Lending would basically stop, they wouldn't be able to invest anymore, and wouldn't have the ability to continue to pay back the loans that taxpayers have given through stimulus funding. It's important to remember that the big banks are all paying back their loans on time with interest. Arianna seems intent on ruining the big banks, but surely her economics professors from Cambridge would be worrisome of such a dramatic rush on the banks that hold most of Americans' wealth and investments.
If we as a society have a problem with banks shelling out large bonuses (and we should have a problem with this!), then let's address that problem. Instead of taking our money away from national banks, let's take our votes away from the regulators who are not enforcing a seemingly fair ethical code on the entities they are funding. Does anyone truly think our economy can survive right now without these large financial institutions? Their infrastructure, their relationships with other lenders, loan servicers, and international banks allows them to do things that local banks simply can't. A large bank can afford to write down a mortgage to allow a homeowner to stay in their home...many local banks cannot afford something like this.
Another problem with the local bank rallying cry is that we don't have any evidence that local banks are more responsible or ethical than big banks. In fact, considering that local banks have less scrutiny by regulators as well as media, who's to say that they don't actually get away with more questionable activity when it comes to spending their customers' cash on bonuses or shaky investments? Story after story comes out of local banks closing because they gave out reckless loans. Is my money any safer at my local corner bank? There is no data to suggest that.
As an individual, you decided to put your money in XYZ bank. Before you decide to up and take it all out because HuffPost says so, how about looking at the finances of your banking institution. Are they paying back their tarp loan? Have you actually called or written to the bank and asked them to stop paying out big bonuses with your taxpayer-financed loan? This might be a good first step in getting the big banks to play a friendlier game. Is the alternative smaller bank going to treat you better and be more responsible with your money? Is there any net gain for you in switching? I'm not saying that moving local is the wrong decision for everyone, but it's a personal decision...not one to be made by a media giant.
