Brockton Saves $ and Protests Foreclosure Misdeeds by Moving $170 Million Account from Bank of America

Although consumer-level “move your money” campaigns are popular, the sad thing is that many individuals are only marginally profitable as checking/savings account customers. So transferring your account out does not have enough of an impact to make a difference (unless you do so in a way that makes branch staff uncomfortable, by doing it in person and describing their banks’ bad behavior. Enough of that might make a psychological difference). The key to retail customer profitability is cross selling, usually at the time of account opening. So the checking account is the gateway product for them to get customers to sign up for retirement accounts/brokerage, credit cards, and (hopefully sooner rather than later) mortgages.

By contrast, bigger customers who use multiple products are a sweet spot for banks. Getting churches, endowments, small businesses, and cities to move money out of the “too big to jail” banks hits them in their wallet and can also generate the sort of press coverage that will make it easier for their peers to make similar moves.

The Boston Globe reports on how the City of Brockton, which has one of the highest foreclosure rates in the state of Massachusetts, decided to save money and send a message by moving its payroll account from Bank of America:

Brockton will move its $170 million payroll account out of Bank of America, a move the city says makes good business sense but which advocates for residents facing foreclosure see as a just response to the national lender’s role in the subprime mortgage crisis…. in this case the switch means a savings of $20,000 to $30,000 a year in fees….

Both [City Treasurer Martin] Brophy and Mayor Linda Balzotti adamantly denied making the change based solely on the foreclosure issue. But each also said it didn’t hurt to send a powerful message.

Yves here. Local groups pushed for the change:

In March, members of the Brockton Interfaith Community, Coalition for Social Justice, and City Life asked the City Council to divest, pegging Bank of America as the institution with the poorest rate nationally of loan modifications per the federal Home Affordable Modification Program, which was created to address the crisis.

Advocates at the time also said the lender was lax in working with groups such as Neighborhood Housing Services of the South Shore to modify local loans..

City Councilor at Large Jass Stewart has lobbied for Brockton’s divestiture from Bank of America, filing a resolve asking the city for official action.

“For me, what the city has done is about business, but it is also symbolic,’’ Stewart said. “Bank of America should not get another penny from the City of Brockton.”

He said that, in addition to divesting from Bank of America, he’d like to see the city require mandatory mediation between homeowners and their banks before foreclosure is declared. He’d also like the city to charge banks a mandatory fee to be held in escrow when a property is seized, to ensure it is maintained.

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  1. Joe

    Taylor, that information is in the linked article.

    This is a great story, in my opinion, and one which should be shouted from the rooftops. People might think that this is moving the deck-chairs on the Titanic– no, this is actually the kind of action, that can give other actors courage to move away from these too-large, too-compromised organisations. After all, the power of BoA is based on regular people’e endorsement of their business.

  2. Greg R

    “The key to retail customer profitability is cross selling, usually at the time of account opening. So the checking account is the gateway product for them to get customers to sign up for retirement accounts/brokerage, credit cards, and (hopefully sooner rather than later) mortgages.”

    Yes, multiple accounts complicate things. Step 1 – change your paycheck direct deposit to another bank.

  3. off_leash

    All politics aside, the cost savings suggest that someone was breaching their fiduciary duty by using BofA in the first place.

    1. Thorstein

      It’s a shame Brockton didn’t move its accounts to the Bank of North Dakota. Second- and third-tier communities like Brockton wield little influence with behemoths like BofA. Without people, North Dakota’s congressional delegation pretty much votes with the highest bidder, but North Dakota might give small town’s deposits–and maybe someday their bonds–a little more respect.

      1. Rcoutme

        I suggested to my state (Massachusetts again) representative and senator that our state should create a bank similar to the North Dakota design. The rep responded (the senator did not) claiming that he believed that doing so would be bad due to, of all things, corruption.

        In short, my representative insisted that Massachusetts should not help its communities to fund projects via a state-run bank because the representatives and senators would rob it. It was eye-opening honesty at least…

    2. MacCruiskeen

      No. From the article: “Bank of America offered no-fee accounts in 2009 but has since begun charging fees.” So the fees have gone up since the last time they negotiated the contract. So it was in their fiduciary duty to look for a better deal elsewhere, and they found one.

      Locally, Cambridge is making noises about changing banks. Apparently, one of the issues for the local banks was coin-counting services for the parking meters. None of them could do it. So the city manager decided to remove that requirement so the local banks could have a better shot at competing for the contract. I think the decision gets made in the fall.

  4. Warren Celli

    Good article but only for the process of shunning or boycotting that it celebrates.

    Whether or not one is screwed by a giant (Bank of America, representing Pernicious Greed for Destruction, destroy the host Xtrevilism) or screwed by a comparative midget (Eastern Bank, representing good old fashioned Greed for Profit, keep the host victim alive to boink and exploit another day Evilism) is of little real consequence.

    Has anyone ever computed and created a definition of ‘Bankster Freedom Day’, like ‘Tax Freedom Day’, that is used to describe when the average American has earned enough money (in theory) to pay off his or her total tax obligations for the year?

    A ‘Bankster Freedom Day’ definition that would include all; bankster fees in retail and commercial transactions, commercial and mortgage interest, goods stolen, and litigation costs levied AT EVERY STAGE of the production and sale of goods in Scamerica, and yes, globally, (that would include all of the effort revealing and dealing with the fraud, and still yet uncovered fraud, and consequences of MERS, out of synch deposit posting fees, LIBOR rate rigging, etc.)? That ‘Bankster Freedom Day’ definition would also include all of the cost of the hardship, early deaths, and cost of tents, of those now living in tent cities as a direct result of the MERS fraud. [Aside: Do you really know who owns your mortgage and note?]

    That ‘Bankster Freedom Day’ number would show that deciding to get effed by a giant or a midget is a chump change decision, one that actually validates and legitimizes the status quo, and not as important as not getting effed at all. [Determining and popularizing’Bankster Freedom Day’would be a great project for NC.]

    If you want to regain control of Xtrevilist gangster banking and crooked government you are going to have to shun and boycott the electoral process and rewrite the Constitution.

    Deception is the strongest political force on the planet.

  5. different clue

    Small scale marginally-profitable customers of megabanks may not make much of a difference to the megabank by defecting with their money, but they might make a major survival difference to the microbanks or the credit unions they defect INto with their money. So “move your money” could make a real difference on that end even if not at the one end.

    Catherine Austin Fitts has written about this sort of thing in articles, her blogsite, and elsewhere. Circulateral movement of money within localised or regionalocal communities.

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