Move Your Money NEWS ANCHOR: And next tonight-- what's behind a campaign to move money out of big banks and into smaller ones. "NewsHour" economics correspondent Paul Solman has that story. It's part of his ongoing reporting on Making Sense of financial news. [MUSIC PLAYING] [FOOTAGE OF FILM “IT’S A WONDERFUL LIFE”] -That's George Bailey. That's him when he was 12. PAUL SOLMAN: An online video gone wildly viral, with more than half a million hits in its first two months. A mash up of "It's a Wonderful Life". -Enter the martini castle. Joy and prosperity may reign forever. SOLMAN: George Bailey and his small bank versus venal villainous big banker Henry Potter. -Times are bad, Mr. Potter. A lot of these people are out of work. -Well, then foreclose. -I can't do that these families have children. -They're not my children. SOLMAN: The online video also cuts in clips from the current evening news. -So what you're saying is those 14 are too big to fail. -I don't think, Senator, I want to use those words. SOLMAN: But this video-- brainchild of, among others, money manager turned political activist Rob Johnson-- doesn't just sit there. It wants us to do something. ROB JOHNSON: Move your money. [TEXT: “Move your money. Get your money away from Potter. If you leave your money with the big banks, they will use it to pay lobbyists to keep Congress from fixing the system.”] SOLMAN: Move your actual money, that is, out of the too big to fail behemoths and into smaller community institutions. JOHNSON: And I hope it sets a warning to the big banks that their sociopathic behavior is not acceptable any longer. SOLMAN: Well, it can be argued sociopathic is over the top. But with their hidden fees, toxic securities, off balance sheet vehicles, and bursting bonuses to boot, the big banks have surely earned some public skepticism. Meanwhile, the Obama administration has proposals to pare the big banks down to size, such as tax the bigger ones more, require more capital and less risk, ban risky trading for banks that receive federal support. But moving your money is more direct. And all you have to do, says Johnson, is start at moveyourmoney.info. JOHNSON: You can watch the movie, and then you can put in your zip code. And it gives you a list of A and B rated small banks where you can put your money safely. SOLMAN: Johnson says the list of banks is being searched 45,000 times a day and that the Move Your Money movement is gaining political momentum all over the country. In Los Angeles, the city council is holding hearings on withdrawing all city funds from too big to fail banks. MAN: The city has got to make them accountable. SOLMAN: In New Mexico, a similar bill would move billions of state dollars into small banks and credit unions. BRIAN EGOLF (New Mexico State Democrat Representative) And we're going to hopefully send a message that we support the community banks and the credit unions that support our communities. SOLMAN: And one candidate for governor of Oregon has made moving the state's money a centerpiece of his campaign. BILL BRADBURY: Big banks have proven they cannot be trusted to act in the public's interest. SOLMAN: But what's it actually like to move your money to a local bank? On the website, I found one very close to home. BANK TELLER: Good morning. SOLMAN: Hi. SOLMAN: It was friendly enough, and neighborly, though I don't really know Scott Wilson. SOLMAN: Down the block from me? WILSON: That's right, yes. SOLMAN: And do you do most of your banking here? WILSON: All of it. BANK CUSTOMER: I like this bank. I've been with this bank for over 30 years. SOLMAN: And you're also a customer of this bank, obviously. SOLMAN: And you like it? BANK CUSTOMER 2: Love it. [FOOTAGE OF FILM “IT’S A WONDERFUL LIFE”] -All right, now Mrs. Thompson, how much do you want? -But it's your own money, George. -Never mind about that. SOLMAN: By this point, Jimmy Stewart was getting a run for his money. Which reminded us of the economist who first sent me the Move Your Money video, Larry Kotlikoff. His new book, however, is called "Jimmy Stewart is Dead". And personal experience suggests why. LARRY KOTLIKOFF: The large banks will gobble up the small banks. My own experience is I started an account long time ago with Bay Bank. SOLMAN: Four mergers later, small Bay Bank is Bank of America. KOTLIKOFF: And when I went in to refinance my house a few months ago, I saw a clerk who knew nothing about me, nothing about my family. Had just arrived into that job from some other state. And that's what we're dealing with here. We're not dealing with Jimmy Stewart. He's dead. SOLMAN: Village Bank CEO Ken Brennan, though, is trying to impersonate him, without the stammer, of course. KEN BRENNAN: I’m getting a library card for the new community library. SOLMAN: The local library, closed by budget cuts, it's reopening made possible by the support of local businesses, including Village Bank. LIBRARIAN: We're very grateful for that support. SOLMAN: Now did you use this library when you were a kid? BRENNAN: I did. I used this as a child. Yes, I grew up here. And this was my branch library. SOLMAN: So are you indulging a kind of CEO's prerogative here? BRENNAN: Maybe you could call it that, yes. But most of our employees work and live here in the community. So their families can take part and use this as well. SOLMAN: It was getting a little sweet for a jaded journalist, but fortunately I move in various circles. So I asked a really big banker why shouldn't I move my money? ROBERT KELLY: If you think you can get other products and services that are superior to a large bank, then go for it. SOLMAN: Robert Kelly, CEO of Bank of New York Mellon, who suggests thinking back just 25 years. KELLY: We had 20,000 banks in this country. Now we have 8,000 banks. And my guess is 10 years from now, we'll have 5,000 banks, or 4,000 banks. It's good to have lots of competition. But the reality also is that bigger banks offer generally better products and services at generally really competitive prices. And the longer term trend will be fewer smaller banks in the nation for that reason. SOLMAN: And as Nobel laureate economist Paul Krugman reminded us recently, small is not necessarily beautiful. PAUL KRUGMAN: It's possible to have a banking crisis even without too big to fail. It was a lot of small banks that collapsed the financial system in the 1930s. SOLMAN: Indeed 140 banks failed in the past year, with another 702 just added to the FDIC's problem list. Moreover, says Robert Kelly-- KELLY: We also have a gigantic economy, which you can't run with a lot of really small banks. You need big, successful, sophisticated, profitable banks. SOLMAN: But the Village Bank is a $600 million business, says CEO Brennan, big enough to offer almost anything I'd need. BRENNAN: Size does matter. But you don't need to be a large institution in order to be successful as a financial institution today. CLAIRE MESSINA: How often do you use your ATM? Are you a local ATM user? Do you travel a lot? SOLMAN: Yeah, I use my ATM a lot, and I travel a lot. No problem, says the Village Bank's Claire Messina. Yes, but how about new technology? At my big bank-- SOLMAN: I can deposit a check. And it takes a picture of the check and then gives me the deposit slip with the picture so I feel as if I've had my deposit verified. MESSINA: Well, we don't have as advanced technology as that. That is a great feature. However, the extra feature that I like that we have that the bigger banks don't have is that we're going to call you if your deposit is incorrect so you know. SOLMAN: You mean if I make a mistake, you're going to call me? MESSINA: Because we're a tight knit group, this is what we do for our customers. SOLMAN: After all, it's a community bank. BRENNAN: 90 percent of the deposits that we take in, we lend back out into the community in form of home mortgages, consumer loans, and small business loans to local businesses operating within our communities. SOLMAN: We asked the CEO to show us a couple. BRENNAN: I used to play golf here as a kid growing up. LARRY SMITH: Well, we start out with some on the ground. The buckles usually go on the outside. SOLMAN: Larry Smith lives across the street from me. Rents canoes and kayaks a mile away in the summer. Cross-country skis and snowshoes this time of year. SMITH: You lift up your right foot and put it down. You lift up your left foot and put it down. That's your lesson. SOLMAN: Larry's been a Village Bank borrower for nearly 30 years. To keep the snow in shape, for example. SMITH: I just bought a new grooming machine here for $70,000, which I did a line of credit, quick advance that worked out very nicely. BRENNAN: His success is our success. So I think we have a great partnership and have had for a number of years. SOLMAN: Last stop-- a nearby group home for developmentally disabled adults. BRENNAN: Hi, how are you? Ken Brennan. Nice to see you. -Hi. SOLMAN: This is one of a dozen or so such projects financed by the Village Bank. BRENNAN: Nancy, good to see you again. SOLMAN: The Bank's advantage, coming up with quick cash for a down payment, says nonprofit developer Josephine McNeil. JOSEPHINE MCNEIL: Nobody's going to hold the property while we wait six or eight months to get the money together. SOLMAN: Again the bank says it's because it knows its borrowers. Like Nancy Slamin, who runs the group homes. SOLMAN: How many years have you been working with the Village Bank? NANCY SLAMIN: 30 years. SOLMAN: 30 years. SLAMIN: 30 years. MCNEIL: 16. SLAMIN: Our clients, people who live in this house and in our other homes, do their banking with staff at the Village Bank. SOLMAN: Do you bank at the Village Bank also? And you guys do as well? -For over 40 years. SOLMAN: This is beginning to seem like a complete put up job. No, I mean really. This is like ridiculous. You know, nobody's going to believe this, watching this on camera. BRENNAN: You don't believe? SOLMAN: No, I believe it. But literally everywhere we go. I mean are these ringers? What have you done here? BRENNAN: No, no, no ringers. These are just our customers. SOLMAN: And so that's the case for moving your money to a community bank. The case against-- that it's a futile, if feel good, effort to turn back the clock. We'll see.