New Yorker: Move to CUs to deal with megabanks

NEW YORK (10/27/09)--Consumers will have to rise up "en masse" and move their money to credit unions before the market will deal with megabanks' problems, according to a recent article in the New Yorker.

The author, James Surowiecki, noted that big banks--like Wells Fargo, Citigroup, Bank of America and JPMorgan Chase--have even gotten larger, controlling nearly 40% of the country's total banking deposits and two-thirds of credit cards (The New Yorker Oct. 26).

Banks' growth isn't because of their customer-friendly philosophy. Instead, they've done the opposite by charging higher fees than other institutions. But many customers and clients haven't moved on because switching from one financial institution to a credit union is often considered a hassle.

"A 2001 study showed that the cost of switching a loan came to about a third of the loan's annual interest rate," Surowiecki wrote. "Even if people are dissatisfied with their bank, it's usually cheaper not to fight than switch."

Still, he encouraged consumers to move their money to credit unions. Only then will the market have to deal with the problem of megabanks, which means Washington will then have to deal with them, he wrote.

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