So, HuffingtonPost along with some other big names in liberal media decided to start 2010 (remember, twentyten) off with one hell of a bad idea. Their newest campaign is the “Move Your Money” campaign which prompts everyone to pull money out of big banks and into smaller, community, banks.

Sounds nice, right? Well, that image is deceptive. And here is why.

Under federal law, banks must hold 10% of loaned money on hand at all times. So, if a bank has $1,000 on hand today, they can loan (in the form of mortgages, credit cards, car loans, pay day advances, etc) up to $10,000. But if half of the people who have money in that bank move their funds, the bank has to adjust their loans. Now, they can’t take back a home loan or a car loan, but they can pull back credit limits. Which is really bad for consumers who carry debt. What once was a $500 credit limit with a $250 balance (50% usage which is bad enough on your score) might now be a $300 credit limit with a $250 balance. Add in interest and fees and you might even get stuck with an over the limit fee. Now you are in trouble. Also, banks will stop lending more money until they have more funds on hand which means our (slowly) recovering economy will ground to a halt again.

Now, don’t tell me community banks will make up for this. No they wont. Community banks often have much higher standards for lending, lend in lower amounts, and are stricter in their guidelines. Some would argue this is a good things for consumers, and it is. But it is very bad for our fragile economy.

The sad fact is, we need big banks lending money in order to recover economically. Yes, that means we must continue to deal with big banks. But we don’t need to put up with their crap. While the new consumer laws are not what we hoped, they are a start. And some big banks are good. I bank with a large bank and they have never done me wrong (and I never see their name on ‘bad bank’ lists). I often see community banks on those lists, however.

This is a bad campaign that will hurt the economy. Mark my words. We will lose lending, which means the banks will lose profits, which means we will lose more jobs. But, hey! At least the far left will have shut down a few more banks.

Oh and by the way, if you think I’m wrong – here is what happenswhen banks don’t have that 10% on hand, even if it is sheer accident on their part and only for a few days?