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Credit Union Deposits Surge amid Wall Street Protests

 
Facebook page declares Nov. 5 "Bank Transfer Day," and 45,000 plan to participate

Updated Oct. 18, 2011, 12:47 p.m.

Alli Panelas considers herself part of the Occupy Wall Street movement. But on this Monday afternoon, the 21-year-old cashier for the San Francisco Soup Company isn't camping out in front of the Federal Reserve. She's sitting inside Patelco Credit Union's office on Second and Mission streets, opening a checking account, a savings account and a certificate of deposit.

Within the week, Panelas said, she plans to close her account at Chase. "I'd rather invest my time, energy and money in a community institution rather than a large bank," she said.

Panelas is one of an increasing number of customers making the switch. Bay Area credit unions report hundreds of consumers have begun to move their money.

They say they are angry about the government's bailout of Wall Street and frustrated with plans by major banks to begin charging a monthly fee for debit card transactions. Panelas said five of her friends were also planning to move their accounts from banks to credit unions in the coming days.

"It's not just a matter of fees. Credit unions and banks just have two different models," said Brett Martinez, the president and CEO of Redwood Credit Union, which has 18 branches in San Francisco and the North Bay. 

Unlike banks, "which try to make as much money as possible from their customers and give it back to their shareholders," credit unions are nonprofit organizations that return profits to their members in the form of better rates on loans and deposits, Martinez said.

He said 160 depositors had switched from Bank of America to Redwood Credit Union since Oct. 5 and cited the new monthly debit card fee.

A spokeswoman for Patelco, which has 40 branches throughout Northern California, said the credit union has seen has seen the number of new accounts increase from 78 a day in September to 118 a day in October.

A representative of San Francisco Federal Credit Union, with three branches in the city, reported a more modest increase in new accounts. But industry observers say there is more to come.

"This is the tip of the iceberg," said Henry Kertman, spokesman for the California Credit Union League.

A Facebook page naming Nov. 5 "Bank Transfer Day" has attracted more than 48,000 supporters. Members of the Occupy Wall Street movement are supporting the plan.

Nov. 5 is the date when Englishman Guy Fawkes' plotted to blow up Parliament in 1605. Some of the Occupy Wall Street protesters have worn masks of Fawkes' face.

In interviews, representatives of the banking industry were dismissive of the plan to switch to credit unions.

Beth Mills, spokeswoman for the California Bankers Association, called it "misguided."

Mills insisted the banks decided to add the new fees not out of greed, but because of what she described as costly new regulations passed by Congress. "Five dollars a month is probably less than you pay every day for coffee. Sixty dollars a year is less than most people spend in a month for cable."

Betty Rises, a spokeswoman for Bank of America, predicted customers would stay with BofA even after its new debit card fee takes effect next year because of the convenience that large banks offer — from plentiful ATMs to online banking.

But credit unions counter that they offer those services too, and are able to do so without fees, because they are not for profit.

Most credit unions, including Redwood and Patelco, are part of a national network in which members are not charged a monthly debit card fee and can use any of 28,000 credit union or 7-11 ATMs nationwide free of charge.

"This is the biggest grass-roots reaction that we’ve seen from the financial crisis yet," said Anne Stuhldreher, a senior fellow at the New America Foundation, a nonpartisan public policy institute.

"A lot of people have been waiting for something and wondering why something like this hasn't happened sooner," she said.

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