Tim Geithner Says to Leave Your Money at Big Banks

by: The Baseline Scenario
by James Kwak

But he’s not sure why. During an interview with Mike Allen of Politico, Tim Geithner said that the Move Your Money campaign is a bad idea, but didn’t actually give a reason why. Here’s the whole segment of the interview (beginning around the 3:30 mark):

Allen: “Arianna Huffington has been urigng Americans to move money from big banks to neighborhood banks. Do you think that’s a good idea?”

Geithner: “I don’t, but I do think the following is important that people recognize.”

“But wait, why is that a bad idea?”
“Well, let me say this. Customers of financial institutions should be very demanding in the kind of service they expect, the kind of products they get, the disclosure banks offer, the basic fairness in dealings. So I’m very supportive of customers of banks, of investors in banks, creditors of banks, holding them to very high standards. That’s something that’s very appropriate.”

[Those all sound to me like good reasons to move your money out of big banks. At least, they were for me.]

“Is that campaign hurting?”

“I’m not concerned with her campaign. I agree with the basic principle, again, that we’ve been through a period where I think people are right to expect more of their financial institutions.”

So why exactly is moving your money out of big banks a bad idea?