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the credit union myth

December 20, 2011

Admittedly, I was one of those who thought that simply switching over to a local credit union, especially if it was done by a large number of people, would make a real statement and ‘stick it’ to the big banks, depriving them of the use of our money to finance their irresponsible lending practices, and disrupting the continued merging of bank capital with industrial capital, and by extension, weakening the stranglehold of the these financial monopolies. I got rid of my own Chase account two years ago, in fact.

But, according to an article by Doug Henwood, it turns out that it doesn’t really make that much of a difference, that our money still greases the wheels of these financial juggernauts, especially considering how credit unions and small banks actually end up investing a lot of their money in things like Treasury bonds and federal agency securities (including things like mortgage-backed securities), which in turn get fed via the federal funds market to, wait for it, larger banks like Chase. As Henwood concludes at the end of his article, “Getting banks under control is a matter of politics, not individual portfolio allocation decisions,” and I’m reluctantly inclined to agree.

Of course, there are still a lot of good reasons to bank locally, but ‘sticking it’ to big banks isn’t one of them.


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