Olivia Maiers, spokeswoman for the Iowa Credit Union League, reports that members have gain 7,000 new members and $49 million in new deposits since the beginning of September. Nationally, credit unions have gain 650,000 customers and added $4.5 billion in new accounts during that same time, according to the Credit Union National Association.

The national organization adds that four out of every five of their affiliated credit unions have reported the increase is due to attempts by larger banks to raise customer fees, the Bank Transfer Day movement or a combination of both.

Bank Transfer Day organizer Kristen Christian explained the logic behind the movement on the group’s Facebook page.

“I started this because I felt like many of you do. I was tired — tired of the fee increases, tired of not being able to access my money when I need to, tired of them using what little money I have to oppress my brothers & sisters. So I stood up. I’ve been shocked at how many people have stood up alongside me.” Christian wrote. “Me closing my account all on my lonesome wouldn’t have made a difference to these fat cats. But each of you standing up with me…they can’t drown out the noise we’ll make.”

Big banks like Wells Fargo and U.S. Bank have also taken flak for attempting to impose additions fees on customers who use debt cards, although many of the banks have withdrawn their plans due to public outcry.

On Saturday two of the larger banks will be targeted by members of the Occupy Iowa movement in Des Moines as part of “Bank Transfer Day.” The individuals plan to demonstrate at the Ingersoll Avenue Wells Fargo and Bank of America locations, and The Iowa Independent will have coverage of the event.

Credit unions are member-owned and non-profit; they typically have fewer fees than corporate banks. Credit unions across the country, including some in Iowa, have been offering special promotions and extending hours in preparation for Bank Transfer Day, CUNA said.

“Our struggling economy is not the disease, it’s the symptom,” according to one such campaign. ”There is mounting evidence to prove that big banks with their profit-at-all-costs agenda are actually making our collective disease worse by systematically making choices that undermine the efforts of regulators and ordinary people like us to make changes and get back to a state of health.”

The ICUL posted “Four Tips for a Smooth Bank Transfer Day.” The tips include moving accounts in advance of the Saturday, Nov. 5, date if possible and opening a the new account before closing the old one, to allow for electronic transfer. If individuals must wait until Saturday, they may want to arrive earlier since interest suggests there could be lines. Finally, keep a little cash in your pocket for expenses while all the details are ironed out.

(Jon Collins and  Marcos Restrepo contributed to this report.)

The National Cannabis Industry Association (NCIA) has filed its first lobbying disclosure forms, registering $5,000 in lobbying expenses since it officially began operations in January. While that number is just a fraction of what pro-marijuana groups like Americans for Safe Access ($410,000 since 2006) and the Marijuana Policy Project ($995,000 since 2002) have spent, NCIA is a far younger group. More significantly, it is the only group in existence dedicated strictly to lobbying for the medical marijuana industry.

As The American Independent has previously reported, Rep. Jared Polis (D-Colo.) intends to soon unveil a bill that will prevent banks from denying access to medical marijuana dispensaries. Currently, U.S. Treasury Department initiatives to have banks report dispensary financials and cut off service outright have led many medical marijuana dispensaries in states where they are legal to lose banking privileges.

Meanwhile, according to The Hill, Rep. Pete Stark (D-Calif.) is working with the NCIA on a bill that would resolve the clause in the U.S. Tax Code that has allowed the IRS to aggressively audit dozens of medical marijuana dispensaries across the U.S. Section 280-E of the tax code prevents businesses involved in the trafficking of controlled substances from deducting expenses. Critics of the IRS’s actions have argued that the provision was designed for cocaine kingpins and was never intended to apply to state-legal medical marijuana. The NCIA expects Stark to introduce the bill in the next few weeks.

Marijuana advocates like NORML director Allen St. Pierre have been pessimistic about the chances of even ostensibly innocuous bills like Polis’ banking provision and tax code alteration. While marijuana law reform and protection of state medical marijuana providers have enjoyed some degree of bipartisan support in Congress, truly widespread backing in the House and Senate has so far been elusive.

About three dozen of the top publicly held securities and investment-services firms — which include banks, investment banks, hedge funds, money-management firms and securities exchanges — are set to pay $144 billion in compensation and benefits this year, a 4 percent increase from the $139 billion paid out in 2009, according to the survey. Compensation was expected to rise at 26 of the 35 firms.

The data showed that revenue was expected to rise at 29 of the 35 firms surveyed, but at a slower pace than pay. Wall Street revenue is expected to rise 3 percent, to $448 billion from $433 billion, despite a slowdown in some high-profile activities like stock and bond trading.

Overall, Wall Street is expected to pay 32.1 percent of its revenue to employees, the same as last year, but below the 36 percent in 2007. Profits, which were depressed by losses in the past two years, have bounced back from the 2008 crisis. But the estimated 2010 profit of $61.3 billion for the firms surveyed still falls about 20 percent short from the record $82 billion in 2006. Over that same period, compensation across the firms in the survey increased 23 percent.

How are the banks making so much, despite the crummy economy? For one, reduced competition. Hundreds of hedge funds and a number of banks died between 2007 and 2009, leaving the others to pick up their business. Additionally, the carry trade. It is unbelievably cheap for big banks to borrow from the government, and they are picking up money on the margin when they lend it out. Moreover, big banks haven’t yet reckoned with the foreclosure fraud crisis. Nobody knows how much that will cost them, but some are estimating in the billions.

Lawmakers say more work is needed to reform Wall Street. (Flickr: Pamhule)

Soon after Rep. Brad Miller (D-N.C.) came to Washington in 2002, a fellow member of the House Financial Services Committee told him to pick an arcane financial issue — any issue — and to make it his pet topic. Miller chose mortgage finance. He knew little about it. Banking lobbyists peppered him with data, but he had difficulty getting much information from independent sources.

[Economy1] “I was even reduced to reading blogs,” he quipped to a crowd of bankers, community organizers, financial reform experts, hedge fund managers and government aides at the Roosevelt Institute’s conference, “Financial Reform: Will It Work? How Will We Know?” on Monday. But Miller educated himself on the topic and became a leader in pushing for stronger regulation of mortgage products. By 2008, as the financial system collapsed, all of his colleagues in Congress had joined him in reading up on everything from liar loans to naked credit-default swaps.

That period of intense interest is over following the passage of financial regulatory reform legislation this summer, Miller and others said on Monday. But that does not mean that reform is done. In fact, because political attention has flowed from Wall Street to immigration, unemployment and myriad other topics, reform is imperiled. The regulatory law gave guidelines for fixing the financial sector, but the rule-writing process has fallen to dozens of agencies and government bureaucrats currently hammering out the details. That means the real work of reform is just beginning and the country is only incrementally closer to a safer financial system.

“It has become quite clear in recent years that the servant’s servant has become the master’s master,” argued Rob Johnson, a former hedge fund manager and current director at the Roosevelt Institute. Banks, he said, which should help companies merge, access credit and grow, instead ended up leeching off of them, piling on fees and unnecessary products. Ultimately, average Americans suffered. “We do not yet have a balance between society, the real economy and the financial sector.”

A few visiting investors noted that the sector has become more concentrated — due to a number of banks failing, and the others picking up their business — and therefore more dangerous. Each one of the systemically risky banks, like Goldman Sachs, has become more systemically important and therefore more likely to receive government backing if financial troubles re-emerge. (It will take years for Washington to put capital requirements and other safeguards in place.) Moreover, the long process of rule-writing allows banks ample time and opportunity to lobby bureaucrats working on legislation.

And that rule-writing is ongoing among dozens of agencies, including the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission, the Treasury Department and the Federal Reserve. The government is also in the process of organizing and hiring workers for the new $500 million Consumer Financial Protection Bureau. And the massive legislation is drawing major lobbying interest. This campaign cycle, the American Bankers Association has pledged $13.6 million on lobbying and $2.1 million to campaigns, pushing for looser rules on banks. J.P. Morgan Chase alone has contributed nearly a million to campaigns this year.

So how will those interested in reform know if it is working in the meantime? The question posed to the gathering of 40 or so met with many answers. “[Reform] would be working if the banks were making a lot less money,” Miller argued. “The reality is for it to be successful it has to be a win-lose-win,” with markets and consumers winning, and banks losing. The Wall Street Journal reported yesterday that financial-sector corporate profits are near their all-time highs.

Sen. Jeff Merkley (D-Ore.) was more optimistic. He praised the reform process, citing the creation of the Consumer Financial Protection Bureau, derivatives reform and proprietary trading regulations as big wins. (Elizabeth Warren, the White House and Treasury advisor helping to build the new bureau, attended the conference but did not speak.)

Still, Merkley conceded, “There is more to do.” He noted that ratings agencies — which stamped triple-A ratings on hundreds of billions of dollars of worthless mortgage-backed products in the run-up to the recession — remained unfixed. (“They’re almost useless,” sighed Jerome Fons of Kroll Bond Ratings agency.)

Others pointed to problems with the derivatives clearinghouses, which might now be the new “too big to fail” institutions. (If banks post insufficient capital to cover their derivatives trades, and another credit crunch hits Wall Street, with investors pulling cash out, the government might be forced to bail them out to calm the markets.) Some criticized the new Treasury Department Office of Financial Research, tasked with understanding Wall Street’s new innovations. Dozens of such niche issues arose.

“There are the tools there to do this,” Mike Konczal, a Roosevelt fellow, said. “Now it’s an issue of political will. [The financial regulatory law] doesn’t presuppose that [reform] will happen. But it does have the tools to do it.”

He concluded: “Those tools sit there, and there’s going to be a lot of pressure not to use them.”

Here’s a scary thought: Let’s say the European sovereign debt crisis flares up again, and one or two Euro banks fail. (Not a bank like UBS or Deutsche Bank, but a medium-sized bank like Bank of Greece or a Landesbank.) That, in turn, causes a U.S. money market fund — many of which have large exposures to Euro banks — to “break the buck,” which leads to another run on money market funds.

The Fed would be powerless to help. The Fed’s emergency lending authority (the famed Section 13(3)) requires that any emergency lending facility to non-banks be approved “by the affirmative vote of not less than five members” of the Fed Board of Governors. Currently, there are only four members of the Fed board: Bernanke, Warsh, Elizabeth Duke, and Dan Tarullo. Donald Kohn retired earlier this month, and the Senate has yet to vote on Obama’s three nominees (Janet Yellen, Peter Diamond, and Sarah Bloom Raskin).

While I don’t expect this scenario to happen, it’s certainly not out of the realm of possibility. And if it did happen, the Fed would have to sit on the sidelines and watch the carnage unfold.

I understand that Senate floor time is scarce (really, I do), but this absolutely has to be at the top of the list. Yes, I know it would be time-consuming to overcome Sen. Shelby’s opposition, but you know what? Screw Shelby. This has to get done, and soon.

Let’s translate a bit. The worst of the financial crisis — not the whole recession, including housing and jobs and businesses and investment, just the part of the recession that really mucked up the United States’ big banks — hit in the fall of 2008. Lending markets seized. That did not just mean that banks could not give loans to homeowners or companies. It meant that banks had trouble loaning cash to one another.

The Federal Reserve recognized the credit crunch as a catastrophe, and immediately took extraordinary measures to prevent the equivalent of an old-fashioned bank run in the invisible interbank lending market. Out of thin air, the Fed created programs like the Term Asset Loan Facility, a $1 trillion fund to secure the asset-backed securitization market — a major source of financing for banks and other companies. The alphabet soup of emergency Fed programs, including TALF, helped to thaw credit markets and stabilize the banking system.

But, Economics of Contempt notes, due to the opposition of one senator — Richard Shelby (R-Ala.) — the Fed does not have enough seated members on its board to create such programs in a crisis. And Congress does not have the wherewithal or speed to create them itself. Granted, there’s no emergency on the horizon. But, given that the United States is suffering from, oh, possible disinflation, mass long-term unemployment and record high debts, now is hardly the time to short-staff the central bank.

At The New York Times, Sewell Chan has more details on the problem of vacancies in important economic positions.

One of the more aggressive new requirements, the so-called Volcker Rule, would limit proprietary trading to 3% of Tier 1 capital. But the rule may be easy to sidestep. Goldman Sachs is leading the way around the regulation, by simply reclassifying many of its prop traders as asset managers. One major initial criticism of the Volcker rule was that it’s hard to distinguish prop trading from market making. Goldman is using this blurry line to its advantage.

The problem is that it is virtually impossible for regulators to tell whether a bank is making a trade for a client or on its own behalf. Shouldn’t it be easy to tell, depending on who keeps the profits or eats the losses? Indiviglio explains, not so much:

Prop Trading

A bank senses that XYZ corp is going to collapse. So its prop traders short the stock by selling stock option contracts to investors who want to bet long on XYZ’s continued success.

Asset Management

A bank senses that XYZ corp is going to collapse. So its prop traders asset managers short the stock by selling stock option contracts to investors their clients who want to bet long on XYZ’s continued success.

You may have noticed that, other than the two strikethroughs which merely changed terminology, those two descriptions were identical. The firm accomplishes precisely the same end. The Volcker rule, thus, boils down to semantics. It’s only prop trading if you fail to classify a trade as “client related.” And there it is — the first big loophole in the new financial regulation bill found and exploited. It barely took a week.

The score so far: Big Banks 1, Congress 0

The final bill, more than 2,300 pages in length, directs regulators to create 533 new rules — applying to everything from debit cards to hedge funds to mortgage underwriting. It contains three central provisions. First, it provides the government with new powers to identify risky banking institutions and to shutter them, via a new systemic regulator. Democrats say this provision ends “too big to fail.” Second, the Dodd-Frank bill makes banks less dangerous, forcing them to keep more capital on hand, banning them from making risky trades on their own behalf and keeping them from investing heavily in vehicles like hedge funds. Finally, it creates a new consumer financial protection bureau, which will have the power to create and enforce new rules regarding financial products like home-equity loans and credit cards.

The White House pre-released only a short excerpt of Obama’s speech, indicating he plans to focus on consumer protections. “These reforms represent the strongest consumer financial protections in history,” he will say. “And these protections will be enforced by a new consumer watchdog with just one job: looking out for people — not big banks, not lenders, not investment houses — in the financial system. Now, that’s not just good for consumers; that’s good for the economy.”

Republicans argue that the bill will stifle the economy, reduce credit and overtax the banking system. Sen. Mitch McConnell (R-Ky.) remarked on the Senate floor this morning: “It’s almost as if it’s a prerequisite for any Democrat legislation: If it leads to more job loss, they’ll pass it. Americans are tired of this kind of ‘reform.’ Job stifling taxes, regulations, government intrusion. These appear to be the three pillars of every Democratic legislative effort.  They’re also the three things lawmakers can do that are guaranteed to kill more jobs.”

Several media outlets have noted that Wall Street’s biggest banking titans — including Lloyd Blankfein, the head of Goldman Sachs, and Jamie Dimon, the head of J.P. Morgan Chase — were not invited to the signing.

Senate Majority Leader Harry Reid and Banking Committee Chairman Chris Dodd were all smiles after the Senate passed its financial reform bill on Thursday. (epa/ZUMApress.com)

This afternoon, the U.S. Senate passed a sweeping financial regulatory reform bill, overhauling the regulation of everything from the biggest banks to consumer financial products to exotic instruments like credit-default swaps to the derivatives used by farmers. The bill passed 60 to 39.

[Congress1] Earlier on Thursday, Republicans Olympia Snowe (Maine), Susan Collins (Maine) and Scott Brown (Mass.) voted for cloture to end debate and move on to the final majority-rules vote. The bill just made the cloture mark, with 60 votes. Sen. Russ Feingold (D-Wis.) chose not to vote with his party, saying he did not find the bill strong enough. White House spokesman Robert Gibbs that President Obama will probably sign the legislation into law next week.

Thus ends a yearlong saga for the bill, whose architects Rep. Barney Frank (D-Mass.) and Sen. Chris Dodd (D-Conn.) spent hundreds of hours in negotiations before coming up with the final package. Work on writing the bills started last summer in the House and the Senate. The House approved its version of reform in December, and the Senate passed its version in May.

The biggest sticking point for reform in the Senate — and one of the reasons the bill took longer than in the House — concerned derivatives, which allow an investor to hedge against price fluctuations in a stock, commodity or other product. The derivatives portion of the bill fell under the purview of the Senate Agriculture Committee, headed by Sen. Blanche Lincoln (D-Ark.). Facing a tough primary challenge from the left, Lincoln inserted a strong provision forcing banks to spin off their trading desks for swaps — a kind of derivative — and to capitalize them separately. Companies vehemently fought against the proposal, but it ultimately appeared, albeit in a slightly changed form, in the final bill.

Once the House and Senate had their bills, the two moved to a conference committee to iron out their differences. In conference committee, the Senate bill was used as the base text, while Dodd led a team of more than 40 legislators voting on various changes. Dodd, Frank and the other conferees addressed everything from regulating derivatives to limiting banks’ ability to bet their own money alongside their clients’. Conference committee culminated in a 20-hour marathon session in June. The combined bill then passed the House again — and today it cleared its last hurdle in the Senate, sending it to the president’s desk.

The final bill, more than 2,300 pages in length, directs regulators to create 533 rules, according to the Chamber of Commerce. The bill contains three central provisions. First, it provides the government with new powers to identify risky banking institutions and to shutter them before they harm the broader financial system, via a new systemic regulator. Henry Paulson, the Treasury Secretary under President Bush when the financial crisis first hit, lauded the provision this week. “We would have loved to have something like this for Lehman Brothers. There’s no doubt about it,” he told The New York Times, referring to the investment bank that collapsed, destabilizing the country’s financial system and contributing to the credit crunch. Democrats say this provision ends “too big to fail,” by providing the government with a way of shutting down failing banks, reassuring counterparties and containing any sense of panic.

Second, the Dodd-Frank bill makes banks less dangerous, forcing them to keep more capital on hand, banning them from making risky trades on their own behalf and keeping them from investing heavily in vehicles like hedge funds. “[The bill] places some limits on the size of banks and the kinds of risks that banking institutions can take,” President Obama told an audience of Wall Street workers this spring, speaking at Cooper Union in Manhattan. “This will not only safeguard our system against crises, this will also make our system stronger and more competitive by instilling confidence here at home and across the globe. Markets depend on that confidence. By enacting these reforms, we’ll help ensure that our financial system — and our economy — continues to be the envy of the world.”

Finally, it creates a new consumer financial protection bureau, which will have the power to create and enforce new rules regarding financial products like home-equity loans and credit cards. “Consumers finally will have a cop on the beat … that will monitor the market and write and enforce the rules,” said Susan Weinstock, the financial reform campaign director for the Consumer Federation of America. “The Wild West for financial products and services is coming to an end. Consumers will now have a bureau that will clear out the tricks and traps in financial products and services that have harmed so many Americans.”

That said, the bill is imperfect by anyone’s measure. It orders 68 studies, and leaves major decisions up to regulators prone to lobbying and industry influence. It includes loopholes, including the glaring exemption of auto dealers who make car loans. But a broad range of experts on Wall Street, consumer protection and governance have lauded it as the strongest reform made since the Great Depression.

“This isn’t just about dollars and cents,” Sen. Harry Reid (D-Nev.), the majority leader, said on the floor. “It’s about fairness and justice. It’s about making sure there’s not a next time. It’s about jobs. And it’s about rescuing our economy.”

Correction: Sen. Scott Brown was initially incorrectly listed as being from Maine. Thanks to commenter Flitedocnm for pointing out that Maine cannot in fact have three sitting senators.

Georgia has the most bank failures, despite the fact that it is only the ninth most populous state. USA Today explains:

[I]t’s a combination of an antiquated state law that favored a plethora of smaller community banks over multi-branch giants; a population explosion in metro Atlanta that fueled massive suburban real estate development and a crush of new banks formed to cash in on the Atlanta boom shortly before the market tanked.

First, Georgia is home to a huge number of state and federally chartered banks. At the end of 2008, Georgia had 334 banks. That’s more than California, which has nearly four times Georgia’s population, or Florida, which has twice as many people. …

Even after interstate giants such as Bank of America, SunTrust and Wachovia could expand freely across Georgia, growth in Atlanta’s suburbs spurred the opening of banks looking to profit from loans to real-estate developers. Metro Atlanta had three of the nation’s 10 fastest growing counties of the 1990s. Because of that growth, about half the state’s banks ended up clustered around Atlanta, said Joe Brannen, president and CEO of the Georgia Bankers Association….

Georgia’s diversity of small banks was an asset when the economy was strong, with consumers benefiting from competitive rates and broader sources of credit, said James Verbrugge, a professor emeritus of finance at the University of Georgia’s Terry College of Business. It became a liability when the bottom fell out of the housing market and smaller banks had less capital to weather the crisis.

“There are encouraging signs in the first-quarter numbers,” Sheila Bair, the head of the FDIC, said in a statement. “Industry earnings are up. More banks reported higher earnings, and fewer lost money. … [The $18 billion] is more than three times as much as banks earned a year ago, and it is the best quarterly earnings for the industry in two years.”

That said, the FDIC’s “problem list” of banks rose to 775, up from 702 last quarter, and the assets of these “problem” institutions grew 8 percent. During the first three months of the year, 41 banks failed. These are the worst numbers since 1993.

All in all, the report paints a picture of a banking sector bolstered by low interest rates and government backing, but one in which the haves — mostly bigger banks — are pulling away from the have-nots — smaller and community banks. Those smaller banking institutions with thin capital cushions will continue to face serious hardships due to delinquent loan, foreclosure and other losses.

Additionally, the number of FDIC-backed banks fell below 8,000 for the first time in the agency’s history, as banks failed or merged with one another.