“I Just Can’t Trust Them…”
Posted by Larry Doyle on January 20, 2011 7:06 AM |
Screw me once, shame on you!! Screw me twice, ….
You know how that works. Yes, indeed, we do know how that works. In fact, Americans know all too well that they were badly screwed by many within the financial industry. In the spirit of fairness, there were also many consumers who screwed the system by knowingly falsifying info on mortgages and loans. From both ends, the biggest loser over the course of the last decade has been our virtues of truth, transparency, and integrity. Rest assured, though, that pursuit goes on and it is having ripple effects across Wall Street specifically and the financial industry as a whole.
I see clear evidence of this dynamic in a recent commentary at The Center for Public Integrity. Why are banks very concerned and scrambling to protect their franchise value?
Why are overall trading volumes down? What does any business need? Customers. What is Wall Street losing? Customers. Let’s navigate as the CPI writes, Customers Close Accounts to Protest Wall Street, Abusive Lending Practices,
The death blow for Michael Dalrymple’s Phoenix eco-friendly building supply company was the credit freeze that paralyzed the banking system and the nation in the fall of 2008.
“Once the economy melted down, 70 percent of my business evaporated overnight,” Dalrymple said. “Customers who would use a home equity line of credit to retrofit their homes were told by their banks that they didn’t have that credit anymore.”
His business, called a.k.a Green, held on a little longer, but closed its doors for good in 2009.
Dalyrmple said he blames the big banks and their political enablers for credit freeze that killed his business. “It was extremely frustrating as an entrepreneur looking to be in charge of my success or failure to come to the realization that the fate of my business was determined by greed, corruption and illegal behavior on Wall Street and in Washington,” he said.
It took more than two years, but Dalrymple will soon extract his own very small measure of revenge.
He is cutting ties with JPMorgan Chase & Co., his longtime lender, and moving all of his banking assets to a regional Arizona bank with no link — as far as he knows — to the financial crisis. In doing so, he will join a growing number of consumers whose anger at Wall Street over the financial crisis, subsequent $700 billion bailout, and consumer credit practices seen as predatory or unfair has pushed them to close accounts with major banks most associated with the crisis.
These opt-outs were identified through the Public Insight Network, a group of thousands of people across the United States who have agreed to help Center journalists and American Public Media partner newsrooms by describing their personal experiences. They are not necessarily the customers the banks want to lose.
Dalrymple soon found a job working on an environmental retrofit project at an Arizona university. Others who said that they were pulling their business from major banks are teachers, computer programmers, and retirees with comfortable financial cushions. Many have good credit, stable jobs, and own their own homes.
As a group, they are disillusioned with the financial industry, and aren’t sure if the Consumer Financial Protection Bureau, which is due to go online this summer, will serve as a meaningful check on Wall Street power.
“I’m not a fanatic that thinks that all big corporations and banks and the people in them are bad,” Dalyrmple said. “But I’m realizing I have choices, and even if some of those take more work, it might be worth the change.”
How many bank customers have fired their bank as an act of protest?
A Zogby Interactive poll from last year found 9 percent of U.S. adults have taken at least some of their business away from a large bank.
9 per cent in business terms is a very large number. The CPI story goes on to describe similar situations with other individuals and business owners. What is the recurring theme as to why people are taking their business elsewhere?
This group includes Christine Acosta, a 27-year-old barista in Portland, Ore. who is struggling to make ends meet. Acosta told the Center she cut up all her credit cards and left her bank to open an account with a regional credit union. “Following three years of hidden fees, rate increases, and fine print, I finally had enough,” she said.
But she hasn’t disengaged entirely. She has about $1,000 left to pay off on a Bank of America Visa card before she can declare herself Wall Street-free.
Acosta, who has a college degree, hopes to rejoin the white collar workforce when the recession eases. But she said even if her finances improve, she will never again bank with Bank of America or another large bank.
“I just can’t trust them,” she said.
Do you ?
I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own and not those of Greenwich Investment Management. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.