This is the movement in question: [Link 1] [Link 2] (The “Occupy Wallstreet” movement has the respectable goal of getting back at banks for raising fees, by encouraging depositors to move all their money to credit unions).
I posted the following message to the Facebook page of the movement, as well as to the Facebook profile of its founder:
As one of YOU, I fully support your cause (I really, WHOLEHEARTEDLY do), but here is why I refuse to join:
This is a bit scary to the extent that it could cause a bank run if it gets enough exposure. Ironically, a bank run would probably result in another round of bailouts.
Even if there’s no bailout, keeping in mind that the fractional reserve system has banks only holding 10 or 20% of depositors’ money in reserve, the other 80% will have to be compensated from the FDIC. And guess what ultimately backs the FDIC? Tax-payers’ money.
This is a financial system that’s designed to fuck over the American consumer no matter how you try to fight it. Granted, I presented a worst-case scenario where the movement would have enough exposure to deplete banks of all their reserves. Even a grass roots movement that would cause a hindrance of, say 5%, can potentially put banks in the red enough for them to have to tap into the FDIC.
I should also note that I acknowledge FDIC’s insurance limit of $250K, but most millionaires are millionaires because they’re smart enough not to hold all of their money in cash (via checking or savings accounts, or even CDs). Hence, most of the lost money resulting from a bank run would in fact be within the FDIC’s insured limit since most accounts are under $250K in value, and since most wealth held by banks is an accumulation of such accounts as opposed to million-dollar accounts.
Please view these links for reference:
http://en.wikipedia.org/wiki/Bank_run
http://en.wikipedia.org/wiki/Fractional_reserve_systemBest,
Robert Rafii