In a single month last year, October, an estimated 650,000 people in the United States closed their bank accounts and moved their money to a credit union. They are part of a growing movement of people who are voting with their savings against the mainstream banks. What is driving it? A lack of meaningful reform, failure of the big banks to support the useful economy, an unshakable financial culture of massively disproportionately pay that puts bankers on another economic planet – there are many, many reasons why.
Strikingly, a better banking system is being born not as a result of an intelligent response to the financial crash from governments and regulators who still seem not to understand the scale of necessary change. No, the new financial system is growing beneath their feet because people want something better.
Now the UK has its own version of the United States’ campaign. Move Your Money UK launched last night at a citizens assembly organised by nef, Compass and the South Bank Centre called In The Public Interest. The campaign invites people to move their money from the big banks, all of whom to some degree were implicated in the financial crisis, to more ethical providers like the mutuals, co-ops, green saving schemes, credit unions and others.
The event heard from Editor of the Guardian newspaper, Alan Rusbridger, who recently championed the public interest in disclosure campaigns targeted at the media, government and police, and the leading thinker on the role and importance of the public sphere, Richard Sennett.
From nef’s work with Compass setting up the Good Banking Forum, and our lobbying around the Independent Commission on Banking, it was clear to us that systemic faults with the financial system were being met only with minimal reforms.
Several things might explain why. There’s a strange sense of denial in the financial sector itself about how flawed their operations have been. And, an equally strong resistance to understanding the full implications of their only having been saved by massive public intervention – and the continuing quid pro quo for still being businesses that, almost uniquely, are explicitly publicly underwritten.
When the RBS chief executive Stephen Hester was forced by public pressure to decline a bonus of nearly £1 million, the response of the financial sector was telling. In tones that implied the end of civilisation, City voices decried the ‘political interference’ in the running of RBS. The same voices were, of course, much quieter when ‘interference’ saved them from themselves.
Oddly, of course, political interference in terms of elected representatives defending the public interest in state owned and publicly underwritten banks has been remarkable by its absence.
Over half of the Conservative Party’s funding comes from the financial sector, and while the government comfortably promoted a cap on welfare benefits for those made unemployed and who are to a greater or lesser extent victims of economic circumstance, but baulked at the idea of capping the bonuses of those who caused the recession.
The long shadow of the failure of finance is still with us. On the day that Stephen Hester was forced to forego his bonus, it was announced that home repossessions had hit a two year high, and that the share of income of the UK’s poorest 20% was today 43% lower than it was in 1978. In our finance driven economy, much less of the benefit of economic activity has been reaching those on low pay.
In an interesting logical twist, the president of the Confederation of British Industry argued that the public interest activism that forced Hester to decline his bonus was, in fact, against the public interest
The Prime Minister and Chancellor both uphold shareholder activism as the best check on City excess. But, as ultimate overseers of the public interest in state-owned RBS, when it came to act on the bank’s unreformed bonus culture, did nothing. In this way they merely reinforced the view of many that, while a nice idea, in reality shareholder activism is a paper tiger.
Things have been equally bad on continental Europe where Germany proposed that Greece abandon its fiscal sovereignty which is, in effect, its democracy, to serve the interests of a financial sector wanting a return to business as usual.
It’s hardly surprising then, that dismayed at the inaction of their elected representatives, people have started organising their own alternatives.
For these reasons, and the fact that the UK stands to benefit hugely from having a more diverse, safer and socially and environmentally focused banking system, nef is delighted to welcome Move Your Money UK onto the scene. Please tell your friends and colleagues about it. This is a chance to make some difference. I strongly suspect that moving your money will also make you feel good. As the campaign says, its time to ‘Bank On Something Better.’
– from neweconomics.org