This should help to rally people to close their BofA accounts. $5/mo for debit card use at BofA: http://money.cnn.com/2011/09/29/pf/bank_of_america_debit_fee/index.htm

 

I talked to someone I generally trust regarding economic matters, and who is sympathetic to this movement, and this is what he had to say

First off, I'm by no means an economics expert.   I'm just a guy who's read some books and newspapers in an attempt to understand how this complex organism called the economy actually works.

But it is my strong suspicion that this action, no matter how noble the motivations behind it, could cause tremendous harm to a lot of people.   Here's why.  Our banks operate on something called fractional reserves.   Basically, the idea is that they never have the actual amount of money in their coffers that correlates with what the account balances say they have on hand.   The idea of this is that it facilitates the flow of money, causing more use of capital and helping all the various businesses that run in this country achieve payroll, make investments, etc, etc.   For this reason, if a large number of individuals were to close their accounts and "cash out," it could cause a run on the banks.   Think if everyone suddenly won the jackpot at a casino, the casino would go out of business.  

Now, a bank going out of business is not necessarily a bad thing, and I would argue that indeed they should for their questionable ethical practices in using money and amassing it, leading to the huge income disparity we have in place today.   But, a bank going out of business would also put those same net positives like investment and more importantly payroll at risk.    At least, the stock drops dramatically in the markets, causing a huge sell off and another round of layoffs/austerity by small and big businesses alike(which go nowhere to creating employment or stimulating demand for businesses), and at worst, we see a company like GE struggling to meet payroll, putting a million or so workers at risk of getting a paycheck next month, let alone the mass panic that sets in in the population at large when everyone suddenly realizes their nest egg that they set away in an interest account might not actually be there after all.

Now, from an objectivist standpoint, I would argue that this is a huge failure in the idea of fractional banking and emphasizes the very fragile and unsustainable way we do business on a macro level in the US.   And perhaps a little touch of chaos is just what the system needs to spur true and honest reform.   But revolution is very rarely bloodless and the ones that usually suffer the most are the poor, the very individuals that this Occupy Wall Street (and by proxy Occupy Los Angeles) movement is trying to protect.   With that thought in mind, I must strongly discourage this tactic.

Let me just close by saying this: it's very easy to imagine ourselves like little Tyler Durdens blowing up financial skyscrapers(one of my favorite scenes in film), but in the real world, those buildings would spread debris for miles, causing a very significant decrease in the quality of life for everyone who lives below or around those buildings.  

I then asked him "How large a group of people would have to "cash out" before we'd have a run on the banks and the banks would go out of business?

And can you elaborate more on the connection between a large group of people withdrawing, and then how that progresses to a much larger amount of people withdrawing, causing the business to collapse (ie run on the bank)"   This was his reply  

Well, that's the real question, isn't it?

See, one of the unspoken truths about our economic system is that it revolves so much around the intangible idea of "confidence."   First off, I have to have "confidence" that the banks would have enough reserves to handle say ... 1000 people drawing their entire fortunes out at the same time.    Do I have "confidence" that it would if it were 10,000?   Hell, what amount of reserves does just 100 people have in the bank?   100 millionaires is a far cry from 100 minimum wage slaves.   But more importantly, once such a visible action occurs, how do the markets react?   More importantly, what are the news headlines the next day?   Is it "protestors withdraw funds from savings giants" or is it "Is your money safe?"   Those two headlines pronounce significantly direct effects in the markets at large.  

Think of recent examples, a couple of people start to see some cracks in the financial system, so they start pulling their money out and investing in gold.   Well, because of social media and the 24/7 news cycle, this suddenly catches the attention of a few other individuals, so they do the same.   Before you know it, we're witnessing a 100 pt drop in DOW, which spirals into 200, then 300 and suddenly there's this air of depression over the entire country.   Suddenly businesses announce layoffs(like BofA saying they're cutting 30 K workers over the year), stocks continue to plummet and consumers stop consuming because they're scared to death of what happens to their IRAs, their nest eggs, their mortgages.  

This is why it's so hard to predict, because it relies on that most unpredictable of variables: human beings.

I'm willing to different opinions, but I think he makes a pretty compelling case.

Also I did some more research. People might want to read this article as well http://en.wikipedia.org/wiki/Bank_run

I don't think a 200+ person General Assembly works.  I think they need to move to a spoke-hub model, where you have many smaller groups, and a central spokescouncil where only representatives speak.  The role of representative, like the role of meeting moderator, rotates.

Regarding the banks: at best, a "run on the banks" (which is illegal to coordinate btw) is going to be symbolic because we don't have a lot of big accounts.  When the firefighters did it in WI, they were withdrawing hundreds of thousands of dollars from a small bank.  We'd withdraw tens of thousands from a huge bank.  Personally, I don't have an account at the big three.

The run on the banks didn't start the great depression.  What started it was a recession and credit contraction, at least that's the theory.  The banks started to fail, and the people went to get their money -- the "run" happened after the failures.  The failures happened due to a various bubbles deflating in a bad economy.

Also, runs don't happen today because we have the FDIC.

This is great and I encourage everyone to find alternatives, credit unions if possible.

Before recent events I cut up my last credit card (that I rarely used) and mailed it back to BofA (which took over the account from a different company) and told them I wouldn't do business with them again.

All of my finances are now with a member-owned credit union, one I've been with for 18 years. Find a good one, ditch the banks. Vote with your dollars. It's one of your loudest voices.

While everyone closing their B of A accounts in one day may be fun, it will not really hurt them much. They probably take in at least a thousand times more money each day than we can pull out just in loan payments. Can we make them runshort of funds? Doubtful, all they would have to do is not fund maybe one homeloan for a day for every three hundred thousand we pull out. Banks can and do delay funding loans for all manner of reasons.

By the sound of it, most of us would have problems pulling more than two thousand dollars out of B of A.  Even if we could get a thousand people here in LA to do this, the most it would cause is for B of A to tell ten people out of many hundreds that their loan processing was delayed for a day. That does happen often enough. Total effect on banking....... nothing.

I closed my account with First Entertainment Credit Union several months ago, and haven't opened an new account anywhere yet. I would have to recommend staying away from credit unions, or at least First Entertainment.

I liked them for a long time, but when I got a little behind in my loan payment they froze my checking account. They made this questionable move at the end of the day on a Friday, without any warning. If fact, I had spoken with one of their reps that day, and checked my status online, and everthing was supposed to be okay, at least for the weekend.

So, there I was in this situation where I had no access to my money, no cash on hand, and couldn't get a hold of anyone on the phone because the department I needed to talk to was closed. I needed to fill a prescription, and buy groceries, gas, etc., but I was out of luck.

On monday I went to my nearest branch to make a deposit and loan payment, and they told me they couldn't help me because my account was frozen! They put me on the phone with someone from headquartes who told me I'd have to come into they're Burbank office (which would have killed half my day).

I told them that if I was coming all the way out to Burbank it would be to close my account - which is exactly what I ended up doing.

 

On a general note, I think it's important that at least some of the poulation continues to use cash, to the exclusion of bank cards. It's not impossible yet, but I fear one day it might be.