Can Small Banks Solve Your Money Problems?

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Are you angry at banks that are supposedly "too big to fail," but you haven't withdrawn your money because your account is too small to matter? An Internet provocateur has some advice, reports CBS News Business Correspondent Anthony Mason:

If George Bailey from "It's a Wonderful Life" is still your vision of the ideal, small-town banker, then who would you say is today's equivalent of the movie's villain, the dastardly Mr. Potter?

If you ask the Huffington Post's webmistress, Arianna Huffington, it's JP Morgan, Citi, Bank of America and Wells Fargo.

"These banks, which received taxpayer money, that were bailed out by the taxpayer, have not really done their job of helping small businesses, at lending, so the economy can start again and start producing jobs," she said.

In fact, Huffington has launched a campaign that drives the point home with a sledgehammer.

The "Move Your Money" campaign urges customers to move their money out of the big banks and into smaller, community-oriented banks.

Robert Johnson works with the Roosevelt Institute, a progressive think-tank where he helped craft the campaign.

"All of us, collectively, do have money," says Johnson. "And when we move our money, we're voting with a different currency, and that's one that businesses pay attention to."

He adds, "Taking money away from people who pay you zero, charge you 30 percent on your credit cards, hit you with all kinds of overdraft fees, and use that money to do, say, proprietary trading and pay themselves big bonuses and spend $400 million on lobbying - why would you want to empower those people?"

By entering your zip code into the Web site, a list of nearby small banks pops up, all of which have received a rating of "B" or better by independent reviewers.

"We never took any TARP [Troubled Asset Relief Program] money; we never did any subprime lending," says Paula Saraiva, a manager at the People's Trust United Bank in Mamaroneck, N.Y. "We are unique in that we do all the services the larger banks do, yet we give it the personal touch."

The bank also tries to emphasize the little things, like free coin counting.

"Customers want the personal touch," says Saraiva. "They want to know that you know their family, that you know who their children are and that you're actually helping."

Credit unions also offer an alternative. Those banking cooperatives, which operate strictly for the benefit of members rather than corporate stockholders, typically offer terms far better than the big banks.

Take the First Community Credit Union in Kalamzoo, Mich. Six years ago it sold its credit card program to a bank.

Interest rates shot up to as much as 29 percent. Bank advisor Ondine Irving was called in to restart the card program.

"The members got upset," says Irving. "The rates were escalating."

The credit union has capped its maximum rate and has eliminated many fees, and now offers rates as low as about 8 percent.

"Credit Unions can eliminate all that and still make a profit," says Irving. "And if credit unions can do it, the banks should be able to as well.

"They are just choosing not to."

To be fair, many smaller banks are in trouble, too. Most of the more than 700 banks on the FDIC's watch list are small or mid-size institutions, vulnerable to bad mortgage loans.

In "It's a Wonderful Life," even the Bailey Building & Loan nearly went under. Ultimately, it was only George Bailey's ties to the community that gave that story a happy ending.

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