By: Joe Gillen
Many legislators, consumers and industry professionals have called into question the effectiveness of the Dodd-Frank reforms, and their goal of ending the "too big to fail" scenario. While lawmakers and banks continue to battle over the new regulations, and large institutions recoup losses by imposing new service fee income structures on consumers, many state and local governments are taking matters into their own hands.
Several states have proposed new legislation designed to rein in big banks and end abusive lending practices that are negatively affecting consumers, according to the Wall Street Journal. For example, Brockton, Massachusetts, residents have urged the city to remove its funds from large banks, including Bank of America and J.P. Morgan Chase, until it agrees to work with homeowners on providing fair and effective mortgage loan modifications, the Journal reports.
Across the country in Kansas City, Missouri, lawmakers approved a resolution allowing the city manager to select banks that are consumer-friendly, provide affordable services and programs, serve the town's needs and "do not engage in predatory lending," the news source explains. Other states and towns have proposed similar legislation, including Boston, Austin, Chicago and Portland.
Analysts have not dismissed the effects on anti-bank protests, which have intensified in recent months as participants encourage Americans to close their accounts at large financial institutions and take their assets to credit unions and community banks. The impact of these protests was largely recognized after the results of a January 2012 Javelin Strategy and Research study were released, which showed 5.6 million Americans switched banks within a 90-day period. Of this amount, 11 percent - or 610,000 Americans - left their bank in favor of a more affordable institution on Bank Transfer Day.
Americans' frustration over rising fees has prompted many to sign up with credit unions, which saw their ranks swell by 1.3 million new members in 2011, according to data from the National Credit Union Association. During the fourth quarter 2011, which marked the height of the Occupy protests and anti-bank sentiment, Bank of America's deposits fell by $5 billion and Citigroup saw a decline of $2 billion during the same period, the Journal reports.