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March 27, 2009

Making the Banks Run in the Direction We Want

By: Aaron Datesman

Dave Lindorff had this to say today:

It should be clear at this point that the Goldman cabal burrowed deep inside the Washington apparatus is working not to rescue the U.S. economy, but rather to ensure the survival and enrichment of the big banking establishment, and of course Goldman Sachs.

Well, duh! But then there’s this part, where he burrows into my head and splashes my secret thoughts up on the inner tubes:

If you have an account at any national bank, go there tomorrow and take it out. Transfer it to a local bank in your community. You'll get better service, your money will still be just as safe, and you won't be propping up institutions that have been stealing the country blind.

I have a little money in an account at Bank of America and will do this TOMORROW! And ....well, nothing will happen. I could do this at 10 and then go back to reading the blogs and pondering just how very awful everything either is, or is about to be, at 10:07.

Bank of America is the world’s largest financial services firm. It has more than 6100 retail branches and has received about $50 bn in TARP funds, along with an additional $118 bn in loan guarantees. This is outrageous, of course, but it’s also interesting. The firm’s market capitalization is only $19 bn.

Now, I’m not an economist, but looking at those numbers I get the sense that the firm is not really, uh, solvent. In fact, I think it’s a brain-eating zombie bank. So, it’s an interesting thing about how awful everything is, but I think in the current situation we have a lot more power than we used to have. Do you have an envelope to write on the back of?

I’m guessing it takes at least 500 customers to support a branch. $1000 works for me as an average account balance. This totals up to $3 bn. What do you say we all send this letter to our Congresspersons?

Dear Congressperson,

If it’s too big to fail, it’s too big to exist. The nation’s largest banks and Wall Street firms have created a tremendous crisis with no accountability for their disgraceful behavior. Unless the Congress takes immediate action to nationalize and break up the nation’s largest financial firms, including Bank of America, I will withdraw my consent from the financial system. On May 5, 2009, I plan to close my accounts and withdraw my $xxxx balance in cash from Bank of America. This is my right as a citizen and as a depositor. I encourage the millions of my fellow citizens who also have accounts with BoA to do the same on this date.

Sincerely, etc.

cc: Kenneth D Lewis, CEO, Bank of America

Credit to Dave Lindorff (who is absolutely correct), but throwing a fit at the counter of the local branch of an enormous bank is not a stick. An activist-organized bank run, on the other hand, would be a very powerful weapon. Could BoA possibly withstand a billion-dollar bank run? If anybody thinks that the answer to this question is yes, I would love to know why you think this.

We have the internet to use. How could we get this done?

— Aaron Datesman

Posted at March 27, 2009 01:42 PM

Please clarify how 500 X 1,000 = 3 billion.

I was not a math major (stopped after year 1 Calculus in university and the basic Statistics course) but my knowledge of arithmetic does not allow me to get my head around your assertion.

Posted by: Jon H. at March 27, 2009 03:41 PM

Oh .. perhaps you mean 6,100 X 500 X 1,000 ... it's not super-clear in the post, at least to my way of reading it ... as in withdrawing $1,000 X 500 people from each of the 6100 branches ...

In effect a movement-managed run on the B o A, saying to them "pay attention, you pricks" ?

Posted by: Jon H. at March 27, 2009 03:44 PM

Yes, I found that confusing on the first read too.

Posted by: Jonathan Schwarz at March 27, 2009 03:49 PM

Jon H., yes, you've got it. Sorry for the unclear post.

Your interpretation is correct, but I intend a different message. It's a message to the government, and this is it: "Make the financial system run according to our interests, or we will withdraw our consent from that system."

I hate to quote something so lowbrow, but there's a quote from Frank Herbert's _Dune_ which explains this in my head: "He who can destroy a thing controls it."

Posted by: Aaron Datesman at March 27, 2009 03:51 PM

Think global bank local?

As an expression of "populist rage" (only populists dislike being mugged: responsible liberals, conservatives and glibertarians gently thank their mugger and crawl to the hospital without complaining, knowing that their suffering is for the greater good) this would be far more effective and entertaining than, um, mailing tea bags to the white house.

Posted by: buermann at March 27, 2009 04:07 PM

I would say use Facebook and Twitter as tools in your arsenal to spread the word. Personally, I've not had an account at BofA since 2000. However, whatever I could do to publicize an active organized BofA bank run I'd gladly do in a heartbeat!

Posted by: James at March 27, 2009 04:16 PM

Organizing a deliberate bank-run is probably illegal and highly punishable -- we all know who be writin' the laws.

Am I wrong?

Posted by: Cloud at March 27, 2009 04:28 PM

Using FB and Twitter to get the Obama administration to act responsibly is very appealing! The cover of the magazine Fast Company recently declared that the founder of FaceBook got Obama elected.

BoA needn't be the only target. It was just the firm I had some familiarity with and was able to get reliable information about. Don't Citibank, JP Morgan Chase and Wells Fargo also have zombie status, thousands of branches and millions of depositors?

Posted by: Aaron Datesman at March 27, 2009 04:32 PM

I'm not finding anything - at least on the internet tubes - regarding the legality or illegality of organizing a bank run.

Posted by: James at March 27, 2009 04:43 PM

we could also organize patrons to block the entrance to the parking lots or drive-thrus of countless branches, and effectively shut them down. we'd want to take up a collection to pay for towing charges for the volunteers. but if it were coordinated everyone would take notice.

[or as saul would have done, we could occupy all the restrooms of all their branches and no one could poo!]

Posted by: jerry at March 27, 2009 05:15 PM

As long as you are hoarding USA! brand dollars the big boys don't give a fuck what you do.

Posted by: tim at March 27, 2009 05:17 PM

I guess it goes to show how submissive people actually are; that anybody still has any of their 'money' in any of these 'banks'. I mean, wtf? Do they think this is the smurfs and the bad guy will lose just cause he's bad?

Posted by: tim at March 27, 2009 05:22 PM

See if you qualify to deposit at a credit union - if you do, withdraw your bank cash and deposit it there - CU's lend locally, so they didn't touch the credit swaps or other garbage; they're far safer than the banks, and more likely to help out the local community, too.

Posted by: Eric at March 27, 2009 05:29 PM

And ~~Furthermore, I find it deliciously ironic when ~~Populists~~ HA HA get all worked up over something like Bernie's Pyramid scheme-- But the whole US banking system meanwhile is a fucking pyramid scheme, and they don't even try to hide that fact-- But no ~~Populist~~ rage over that.

People are so god damn easily manipulated. When I saw the cover of the last Newsweek I laughed my ass off. With the authors of their "Guide to Populist rage"' names underneath the pictures of lynch mob leaders or some shit. I got news for those crypto pinkos at Newsweek-- If their is ever a lynch mob formed in our country, the first stop will goddamm well be all major media outlets you fucking establishment shills. Torches, pitchforks, goddamm motherfucking pikes.

How's that for populist rage bitches.

Posted by: tim at March 27, 2009 05:37 PM

Wait, what? Why would anyone want to participate in a run on the banks? Making the institution you have your money in go insolvent is, um, a pretty dangerous maneuver. Banks only have a 10% reserve ratio - the FDIC moronically did not collect premiums for the past decade. So, why would I want to drive my bank into the dust and perhaps destroy my savings, such as they still are?

Posted by: saurabh at March 27, 2009 06:05 PM

3bn is, of course, nothing for them - with $118bn loan guarantee; and with congress, government officials, and probably a bunch of judges in their pocket they can always get a lot more.

Also, it's not only about banks, but companies like GE and Microsoft and many many others. I really don't know how it can be fixed. Without a miracle.

Posted by: abb1 at March 27, 2009 06:06 PM

I remember reading many years ago about Walter Wriston at a banking conference in the 1970's was asked, "What if the Arabs want their money back?" To which Wriston smuggly replied, "No problem. We'll write them out a cheque".
There was a stunned silence from the audience presumably because few of the priviledged initiates there actually understood how banking really worked.
Aaron, do you understand why Wriston was so smug?

Tim's pretty much got it. And Eric, too. For sure put your money in CU's even though the CUs bank with BoA et. al. because at least they have a different lending policy.

Posted by: Jonco at March 27, 2009 06:22 PM

I should have added that Wriston was CEO of Citibank at the time.

Posted by: Jonco at March 27, 2009 06:24 PM

Jonco - I gather that Wriston was so smug because the check would be in dollars. The logic here is Tim's from the 5:17 post. Is this right?

abb1 - Respectfully disagree. If the banks have to go back to Congress for bailout funds just because the depositors want their deposits back, that's a huge blow to the people's confidence in the system.

That's the point, to demonstrate that the confidence we all place in the system is not deserved. This includes GE, Microsoft, and all the rest. The weakness of the banks provides a fantastic opportunity.

saurabh - it's the threat, not the action. The system will evaporate anyway, slowly and at great cost, if the proper actions are not taken.

Posted by: Aaron Datesman at March 27, 2009 06:41 PM

IF I REALLY wanted my money, in these troubled times, I would NOT say a word to anybody before I was standing in front of the teller, nobody, 'cause I LIKE my money.

Posted by: Mike Meyer at March 27, 2009 07:01 PM

I might also point out that the $168bn given to BoA by the government in various guises comes to $560 for every person in America. In this situation, small depositors at BoA might be better off crashing the bank and losing their deposits before the zombie kills again....

Posted by: Aaron Datesman at March 27, 2009 07:10 PM

I think this is a great idea and I'd definitely publicize it as far as I'm able if someone could get together, say, a website, facebook page, twitter feed, etc. Countdown clock would be good, too. I think the principle is sound and it IS one of the only really good suggestions for citizen action I've heard on this issue. I'm at Wachovia, which was aided by a midnight-hour tax code change that allowed Wells Fargo to write off the losses from their buy for some indefinite number of years, in effect exempting them from taxes for all time.

Posted by: Alaya at March 27, 2009 08:37 PM

A complementary effort:

Business innovation scholar Clayton Christensen:

"[Industry] regulations ultimately change *in reaction to* the innovators’ success in those markets."

Enter NYC’s $3M for funding next-gen banks, and this Facebook group:


New York City, invest your $3 million “angel fund” in start-ups that, en route to becoming a bank, provide individuals with new and improved ways to customize education, and to showcase and earn money from expertise (i.e., ways to become (more) creditworthy)

Adapted from a biz plan praised by analysts at Microsoft, and top VC firm Draper Fisher Jurvetson.

Viva the rebels! :-)

Posted by: Frank Ruscica at March 27, 2009 09:19 PM

Aaron wrote, - "Jonco - I gather that Wriston was so smug because the check would be in dollars. The logic here is Tim's from the 5:17 post. Is this right?"

Partly. The banking system is a closed loop and virtual, at that. It's just one big "Double Entry" bookeeping system.

For instance, your BoA customers take their money out and put it in Happy Valley Credit Co-op. Happy Valley banks with Citicorp who then lend it to BoA. The only difference is that BoA's borrowing costs are a little higher but their account keeping costs (less customers) are lower. The Bank business is about the loans they make and the interest and fees collected.

If you want to adversly affect the banks you need to discourage people from borrowing from them and that means principally corporations - the big end of town. And good luck with that!

Banks go bust when other banks directly or through the Regulators shut them out of the Double Entry Bookeeping System. It has nothing to do with solvency or anything else. It is simply whether other banks will swap debit and credit entries with them which are then seen as "Loans" and "Deposits". Smoke and mirrors.

I think people would be better off spending their time getting behind an interlocking system of LETS schemes and no-interest Bartercard systems

Posted by: Jonco at March 27, 2009 11:22 PM

transparency is the thing to champion -- get more out open

Posted by: hapa at March 27, 2009 11:28 PM

IIRC part of the TARP that was enacted last Fall removed that little "must have 10% funds to match" rule... so they could have $0 in their bank and still make loans. Correct me if I'm wrong, but I remember some people on the intertubes getting upset because the media wasn't covering that little gem.

Use cash. Don't let them profit off of your transactions.

Posted by: anon at March 28, 2009 12:03 AM

I must agree with Saurabh, especially when you specify that it's a "virtual threat". In practice, it wouldn't be a virtual threat, if enough people got wind of it and participated, a small number would in fact withdraw their money and they'd get threatening letters and the market would get a 2-4 day churn, first down, then up, the profits pocketed by the target of the bank runs--

Or, if the whole point is that it's not a real threat, then it's fraud, and the banks would selectively prosecute, a la the file-sharing prosecutions. If the courts say it isn't fraud then the congress will rapidly pass legislation that retroactively makes it so.

And the net effect, I strongly suspect, would be negative for possible future activism. Even if B of A doesn't get all RIAA on some people's asses,the congress will react, trotting out people to testify before them that they were wiped out because they participated in the bank run, and the perceived cultural chasm between working class people and the snotty NPR-listening types who egged them on will grow greater.

Or, to put it another way: how many people today, nearly 20 years later, know that the testimony about Iraqi soldiers pulling Kuwaiti babies out of incubators was B.S.?

Posted by: Jonathan Versen at March 28, 2009 12:34 AM

IF I REALLY wanted my money, in these troubled times, I would NOT say a word to anybody before I was standing in front of the teller, nobody, 'cause I LIKE my money.

Uncommon sense. You wish you had it.

Posted by: tim at March 28, 2009 01:40 AM

Threatening letters for transferring an FDIC insured deposit to a local bank? I don't think so.

This is all just a game of hot potato. Maybe an organized run could force the inevitable post-looting stage of the inevitable bank nationalizations ahead a little, and that would be a good thing.

If I wanted to stir some shit up, though, I'd up ACORN's ante and not just try to prevent foreclosures, but encourage people to default and give them the legal assistance to demand their legal rights: make the banks prove they own the property. Half the time the banks don't have the paperwork and can't find it, they can't foreclose, and legal title falls to the occupant until they do.

Good times naturally follow: necessary recovery of the savings rate, erasure of debt as banks write down more defaults on homes they lent too much for - not knowing, as they don't, who the hell is paying - plus some unpredictable last ditch nutty effort by government to save the fortunes of the rich and famous.

If nothing else it might get somebody to go in and straighten out the fucking paperwork so the "private-public partnerships" knew what they were going to pay for.

But it's all on the public tab inside three weeks, so it's a little late to start planning. Socialism for the rich moves fast.

Posted by: buermann at March 28, 2009 04:16 AM

How about connecting Aaron's proposal to the nationally-coordinated plan of local protests on April 11 demanding that we break up the big banks?

The "big four" banks are: Bank of America, JP Morgan Chase, Citigroup and Wells Fargo. Go to each bank's homepage, and find their "Branch Locator" page (here's the one for Chase, for example.) Then post a notice about an April 11 protest at one or more bank branches, at the link above.

While you're spreading the word about the protest, do some research on how much your chosen bank has received from the taxpayers, how much its execs are being paid, etc, for some flyers specific to that bank.

On the day of, be flexible and creative and adjust your tactics depending on how many show up. Line the road in front with "Honk to break up the big banks!" signs,, leaflet bank customers (you can expect 15 minutes or so of leafletting time before the cops arrive and you have to stop) send a group in to talk to the manager, saying you want to "visit" the taxpayer's money he's got in his vault. Pass around a sign-up sheet before everyone leaves so you can plan a "next steps" get-together.

At least that's what I'm planning to do. I'll post updates.

Posted by: SteveB at March 29, 2009 12:58 PM


Posted by: Mike Meyer at March 29, 2009 03:11 PM

William Greider appeared on Bill Moyers’ March 27 show

Here’s a slightly condensed excerpt

BILL MOYERS: I read just this morning that there’s a nation wide grassroots protest planned for April 11th…. They’re young people who want to take on banking reform, and reform the financial systems, as a campaign, an ongoing witness.

WILLIAM GREIDER: I know. They call themselves A New Way Forward.

Young people are part of my optimism. They're smart kids, want to be engaged in their times, see the injustices of their society. And they don’t quite trust the great, big existing organizations. And with some good reason, as you know. And particularly, they’re not totally sold on the Democratic Party as the vessel of reform.

So they’re now engaged in putting together the 11, 12, I’m sure they’d like to have 50, little bonfires around the country. These demonstrations. There’s going be one in Washington and one in Wall Street, and a number of other cities. I think if people do those things with or without any help from big organizations, that collectively becomes the voice that tells Washington, we’re on to your silly ideas that Wall Street wants you to do about reform. We see through them. And we have some ideas of our own. And we’re going to come talk to you, and if you decline to talk to us, we’re going to come after you. That’s the voice of democracy speaking.

I plan to be at my local gathering.

Posted by: mistah charley, ph.d. at March 30, 2009 09:51 AM

These are some really interesting ideas being bandied about. I think that, ultimately, in the interest of righting our "ship" economically, environmentally and in terms of equality the goal should be to make society more community-based, and locally oriented. Banking plays a role here, to be sure, but as was pointed out attempts at rejecting the present financial architecture have limited effective capacity. Moving money from one bank to another wont change the system and those who currently dominate, those who steer the "ship", will continue to. Ideas such as New Way Forward, wherein people begin to take an active role in demanding their rights, are a good beginning.

Posted by: Old Major at April 2, 2009 05:14 AM