Credit unions already have the tools they need to take on big banks

The 2008 meltdown showed how big banks that get into trouble can hold the entire global economy hostage. Time and time again, megabanks have chosen ill-gotten profits over people. Big banks continuously demonstrate how little they care, playing fast and loose with consumers’ money, regardless of the impact on the people or communities they serve.

Megabanks have failed to meet the needs of the many communities in which they are meant to serve, funneling bad profits – those that come from taking advantage of hard-working Americans – back to shareholders instead of investing in the local economies or building better services and accounts that help account holders.

Their irresponsible actions played a critical role in the 2008 financial crisis that hurt so many. They use government funds to stabilize their own institution, and then swallow up smaller, rival banks. According to CNBC, from the first quarter of 2016 through the first quarter of this year, the four biggest U.S. banks gave away $145 billion in net share buybacks and dividends. If the banks had kept that money, it could have been used to make new loans which could have supported the building of infrastructures, or new housing to support the growing demand among the surging 25-to-44-year-old population. Those loans could have been used to support the expansion of small businesses, or could have increased the money supply and growth in gross national product.

Megabanks have enrolled customers in accounts meant to trigger more fees or drive profit – sometimes without their knowledge. As reported, Wells Fargo created as many as 3.5 million fake accounts, and for six years charged about 570,000 customers for auto insurance they didn’t need, driving some to default on their loans and see their cars repossessed.

Even when the consequences of these big banks’ abuse did finally come, it was the people who suffered – while the megas were spared. The government decided they were “too big to fail.” But the government got it wrong. Big banks are not too big to fail – they have failed because they’re too big.

Enough is enough.

It is time to show the megabanks that banking is not just about money – it’s about people. Credit unions and other community financial institutions know this and have conducted business with a “people first” mindset. Despite their efforts, consumers have grown more wary of banking because of the manipulative and calculated acts of the big banks.

Together, credit unions and other community-based financial institutions can take back banking. Since CUs already have a strong reputation for honoring consumers by respecting how hard it is to earn every nickel that goes into their account, people trust credit unions and other community-based FIs. In order to grow, however, they’ll have to capitalize on that trust in the following ways:

- Offering products that help people better manage their money
- Investing in the community to help build the local economy
- Treating people like people, not numbers
- Acting with integrity and transparency.

By embracing local institutions, consumers can put the power back in the hands of the people. The public should be holding its financial partners to a higher standard, and that standard has to indicate that consumers have the right to expect a fair exchange. Credit unions provide better service, offer better products and treat customers and members with respect. We can all work together towards a thriving CU system.