Occupy Wall Street, Boycotts, and Credit Unions

Occupy Wall Street protesters have aligned themselves with an event calling on individuals to boycott large banks and move their funds to credit unions.

The event, Bank Transfer Day, is encouraging people nationwide to remove their funds from large banking organizations on or by November 5. Kristen Christian is the creator of this event.

The event’s Facebook page says: “In a stand of solidarity, on November 5th we will transfer our money & close our accounts with these major banking institutions to take our business to credit unions (or local banks if a credit union isn't available).”

Some credit union trade groups are viewing this event as an opportunity and are reporting a surge in traffic on their credit union locator sites. But I'm not sure all credit union CEOs share the same outlook.

Weak loan demand and a surge in deposits over the last couple of years has caused the loan to deposit (share) ratio for credit unions to fall from 83.58 percent at the end of 2007 to 69.44 percent as of June 2011.

Without a profitable means of deploying the potential inflow of funds, this potential movement in deposits from banks to credit unions could become a drag on credit unions as they incur higher cost associated with opening these accounts, face a potential assessment to rebuild the NCUSIF equity ratio, and see their capital (net worth) ratios fall.