Occupy Santa Cruz protestors have railed against big banks like Chase on Water Street. Photo by Tessa Stuart.
Citing a long list of grievances, the Occupy movement has railed against big banks and urged supporters to move their money to smaller community banks and credit unions. Chief among protesters’ gripes: bailout funds.
“You got bailed out, we got sold out!” is the favorite refrain chanted by the Occupy Santa Cruz protestors while demonstrating outside Santa Cruz branches of Chase, Wells Fargo and Bank of America in numerous marches and rallies since early October.
Occupy Wall Street, like the right-wing Tea Party movement, focused a large share of its anger on the bailout. There are pieces missing in the bailout narratives from both the left and right, though. Money loaned to big banks has been paid back, while many of the smaller banks and credit unions—the ones who give loans to the little guy—are still being kept afloat by bailout funds.
Under the Troubled Asset Relief Program, or the bailout, Bank of America and Citigroup each received $45 billion, JP Morgan Chase and Wells Fargo each got $25 billion and Goldman Sachs and Morgan Stanley scored a cool $10 billion apiece. Bailout money rolled in at the local level too, albeit at more modest levels. Santa Cruz Community Credit Union received $2,828,000 and Bay Federal Credit Union was committed $580,212, according a list of bailout recipients compiled by the nonprofit ProPublica.
Local credit unions not only benefited from the bailout, but—unlike the aforementioned big banks, which have repaid their loans in full—locals are holding on to their funds. Santa Cruz Community Credit Union has paid $36,293 in interest and nothing toward the principal of its balance. The money allotted to Bay Federal Credit Union under the Mortgage Servicers bailout (which offers incentives to mortgage lenders and homeowners) is available to individual homeowners who have loans with the credit union. Bay Federal as a lender has not received any money, a representative for the bank said.
Occupy Santa Cruz protestor Michael Donehoo, who moved his money from Washington Mutual to Santa Cruz Community Credit Union, is not fazed by the fact that his new credit union received bailout funds and has not repaid them. “No, it doesn’t bother me,” he says. “There is a definite difference between $20 billion and $3 million.
“Obviously [the big banks] are going to have money in their reserves to pay back—they’ve made a profit off something that is unethical,” he continues. “They make money off building prisons, they make money off of lots of questionable practices. So, it’s sort of like, yeah, they paid their money back, but my concern is how did the big banks pay back their 20 billion dollars? For me that’s more important.”
The movement has been a boon for credit unions. In the first month and a half after Occupy Wall Street began in New York City, an estimated 90,100 new members brought $624 million into California credit unions, according to figures from the Credit Union National Association. Then, on Nov. 5, known as “Bank Transfer Day,” 5,550 new members in California deposited an additional $11.1 million.
Santa Cruz Community Credit Union added 190 accounts in October, a little more than double the number of accounts they typically open in a month, according to spokesman Carlos Rodriguez.
Rodriguez also confirmed that the credit union received $2.8 million through a TARP program for credit unions called the Community Development Capital Initiative. The credit union received an eight-year loan with an interest rate of 2 percent, and an option to extend for an additional five years at 9 percent.
“We got $2.8 million, and it’s not like we turn around and give out that $2.8 million right away,” he said. “What we do is keep it as secondary capital.” Secondary capital, Rodriguez explained, is a loan that counts toward an institution’s net worth, to stabilize that institution.
The positive effects of that TARP loan are still being felt in Santa Cruz. “Had we not received that secondary capital we may not have been as aggressive as we were this last fiscal year,” Rodriguez says, referring to $3,000,300 of loans the credit union made to local small businesses this year. Those loans made the credit union the second highest lender to small businesses in the county (after Santa Cruz County Bank, which loaned more than $7 million), according to the Small Business Association. Big banks Chase, Wells Fargo and US Bank fell far short of those numbers, lending $112,200, $58,000 and $10,000, respectively.
The local support was exactly the point for Donehoo, who already knew the numbers. “I put my money in a credit union because the Santa Cruz County Credit Union spends somewhere along the lines of $3 million in the local economy, where Chase, I think they spent $100,000,” he said. “The credit union makes loans to low–income folks so they can buy houses, it supports local businesses—makes loans available to them—and it’s a non-profit, so they actually have to spend the money in the community.”
