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Roundtable: SDUSD, Navy headquarters, Occupy San Diego and Bank Transfer Day

November 4, 2011 1:16 p.m.


San Diego Unified School District - Will Carless, Voice of San Diego

Occupy/Bank Transfer Day - Dean Calbreath, San Diego Union-Tribune

Navy Broadway Complex - Alison St John, KPBS reporter

Related Story: Roundtable: Bank Transfer Day, SDUSD And Navy Pier


This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

CAVANAUGH: Now that the plan to close schools to save money is gone, how does San Diego unified hope to close its budget gap? And is it the Navy plan to fight back to save its downtown redevelopment project? This is KPBS Midday Edition Roundtable.

I'm Maureen Cavanaugh. It's Friday, November 4th. KPBS senior metro reporter, Alison St. John. Hi, Alison.

ST. JOHN: Great to be here, Maureen.

CAVANAUGH: Dean Calbreath is reporter and columnist for the San Diego Union Tribune. Hello.

CALBREATH: Good morning.

CAVANAUGH: And Will Carless is investigative reporter with Welcome to the show, Will.

CARLESS: Always a pleasure.

CAVANAUGH: And we welcome calls from our listeners. Questions, and comments, give us a call at 1-888-895-5727. Or give us a tweet at KPBS Midday Edition. It was a tumultuous week for the San Diego unified School Board. Last week, voice of San Diego's Will Carless was here to explain why the district was considering closing schools to saving money. This week, will is back to tell us why that plan is gone, and what might be done to replace it. Well, the district spent ten months investigating the school closure plan. It was gone in a vote this week. What happened?

CARLESS: I think what happened was that the School Board realized the gargantuan task that was in front of it, and how unpopular it was going to be. And how many people's lives that would be disrupting by closing some of these schools and essentially bowed to that public pressure. We saw humans of people showing up and picketing the School Board meeting, and some very emotional testimony from kids saying if I try harder in school, will you not close my school? And very emotional stuff like that. And the plan fell flat even before it had got started. So I think that was the reasoning behind it. The broader question, of course is why go through all of this if you're not actually planning to close schools

CAVANAUGH: Remind us what the district was hoping to accomplish with this. The district is facing a minimum deficit next year of about $60 million, and that increases exponentially depending on what happens at the state level. So the plan basically is back in the summer they came up with this menu of options of ways to save money, to save the initial 60 million. One of those options is to close around ten schools, which they estimate will save them about $5 million. So it's -- and another one was transportation that they thought could save anywhere between 1 and $9 million. They've shot down both of those options.

CAVANAUGH: Last week, you talked about trustee Scott Barnett's opposition to the school closure. As it turned out, he was right when saying they wouldn't go through with if. This week, he came out with a plan to save the district from insolvency

CARLESS: What he basically wants to happen, the biggest changes he wants to make, he wants employees to take an across the board ten% pay cut. That picut is on a sliding scale. With the district spending 92% of its general fund on salaries, that's the only place to go to get these really big figures. You've got to look at salaries and benefits or laying off teacher, essentially. So he wants the employees to take the ten% cut and what he wants to do is essentially put teachers' salaries to a referendum to the public. His idea is to float a parcel tax that would replace that money, it would bring teachers' salaries back to where they were before the cuts were made. And he wants to put that on the ballot next year.

>> What about the agreement they're get a substantial raise next here? Is this a cut plus not getting the raise?

CARLESS: That's a very astutely point. One of the reason they're in the hole next year is they negotiated these pay increases in 2010 which is a succession of pay increases that ends up around a ten% pay increase, and they have been on a shorter school year for the last two years, they have been on 100 and 75-day school year. And they want to bring back those extra five furlough days. Barnett wants to go ahead and roll those back, he wants to keep the school year at 180 days but wants to get rid of the negotiated salary raise.

ST. JOHN: So would the teachers end up with the same salary they have now or les?

CARLESS: Less. Not only would they not get the raises but they'd also have to take a cut.

ST. JOHN: Significant

CARLESS: It's really significant. If you're a teacher and saying, hey, in about a year's time when all these salaries kick in, I'm going to have a ten% pay raise, if Barnett's plan goes forward, not only will you not get that extra money but you're also going to see a pay cut by anywhere up to ten%

CAVANAUGH: And of course the ears perk up when you hear parcel tax, because dean, they tried that last year, if I'm not mistaken



CAVANAUGH: And it didn't get the 2/3 it needed to pass. Is there any reason to think it would this time and


CALBREATH: 2/3 has always been a real high hurdle. A majority supports this, but you can't get that 2/3. It's very, very hard. You've really got to get some people organizing if they hope to match that 2/3.

CAVANAUGH: And that actually might explain part of the question that I'm going to ask you. Scott Barnett floated this plan but did not actually present it to the board. Why nothe?

CARLESS: He says he needs to go and look at the numbers more closely and check that he's -- that this money is this, and that his estimates are correct. I was in touch with him all last weekend, and he was bugging him on Sunday to give me an advanced copy of the plan. And he was saying right up to the last minute, it's not quite ready yet. So I do buy that. The other big prove was that on Tuesday the School Board also floated this idea of a sort of construction bond, facilities bond, and they've got this clever kookie idea that what they want to do is replace that money -- which would free up money in their general fund to presumably pay teachers or keep up with their salaries and benefits. So that's two tax increases that are conceivable. I don't think Scott is going to go anywhere. I don't think he's got the support on the board. Very, very strong laborer candidates, for laborer-backed candidates. I don't think they're going to support a pay cut and his tax.

ST. JOHN: And can you actually impose a tax? Would investors -- presumably the district would have to borrow money based on the assumption that they would win these proposals for bond measures if I was an investor, it's not a very good bet

CARLESS: Right. That's the idea; of course, and the other big news is they're downgrading from the credit raising. So every penny they borrow from now going forward, any long-term debt is now going to cost them significantly more money as a result of this downgrade. So yes, the idea is that as far as I understand it, the way the bond works is you borrow money from investors, then that gets paid back from the tax revenue that you've put on the ballot, and people have voted for

CAVANAUGH: I'm wondering, what do the credit unions -- what do the ratings agencies -- I'm getting mixed up. What are the rating agencies saying about downgrading San Diego unified?

CALBREATH: One of the things is the question of the ability to raise taxes to pay these things. I think in general, across the United States, muni bonds are still rated fairly high. But when you've got a state like California where you do have high hurdles to taxes that would be needed to pay back these bonds, then that raises questions in the ratings agencies. Will the bonds be repaid to the extent our investors want them?

CARLESS: Both moody's and standard and poors also took that the step they pointed out in their press release, one of the reasons for this was basically financial mismanagement by the board, the inability of the board to make the tough decisions at the classroom level. What that means is for example rather than laying off 300 teachers last summer, the School Board decided to hire those teachers back with this sort of promise of future revenue that probably won't turn up from the state. But the credit agencies fired a warning shot across the district saying we don't like the way you're operation. You've got to start cutting down to the classroom level otherwise we're going to carry on these downgrade, and it's going to cost you more money.

CALBREATH: Although the credit agencies always want cutbacks. They always push for reduced -- reducing your services to an unrealistic extent. What happens when the 300 teachers are laid off? What happens to San Diego education?


CALBREATH: I think that's one reason that people sometimes disagree with the credit rating agencies. But unfortunately, that's what investors go by.

ST. JOHN: And we didn't know this was going to be what occurs to be a double dip recession

CAVANAUGH: But they did get more at the time. What happens if?

CARLESS: I think the most telling thing that the CFO and superintendent are saying don't spend this money. If we're talking specifically about the decision last summer, they were saying don't spend this money. When your own -- the guy that you've hired to tell you what's the fiscally responsible thick to do says don't this, then that's quite telling. You're absolutely right, dean. The credit rating agencies couldn't care less about the quality of education in San Diego. And I think superintendent Kowba said that at -- this week's meeting. All they care about is whether you'ring fiscally prudent. That's different than providing the best education for kids in San Diego

CAVANAUGH: Many parents must be thrilled at the fact that the schools we were talking about earlier, the plan is off the table. The poor little kid who says please don't close my school if I do better. All of that is really good for specific people and specific patients. But what does this about-face do to the school board's reputation?

ST. JOHN: Well, if I had child in assistant district attorney school, at this point I would be wording, what is there to prevent this district from falling off the cliff N and what does this mean for my kid if the state does come in and take over? From everything we're hearing about the situation in the state level, does the state have the money to bail out this school district? This is apparently the largest school district that might ever have hit this wall

CARLESS: And it's not alone. It's amongst dozens of districts that could potentially go under with the threatened mid-year cuts. The brilliant thing on the closures thing is that there is now a written plan sub suggesting 30 schools. 239th District does go insolvent, what do you think the first thing they're going to do is? They're going to look at this, and say, hey, you guys came up with a plan to close 14 schools. Right 67 let's go ahead and close those. So in term was this insolvency, I think it really ups the stakes not just for the students at the schools that are threatened but for parents and students across the district, that you don't want this to happen. If they come in, they're going to start making these very hard, very nasty decision the.

ST. JOHN: And how would the state affect laborer negotiations?

CARLESS: I'm still trying to figure that out. As far as I can be, they can come in and break those. But I really -- not my area of expertise.

CAVANAUGH: It's interesting how all of these subjects in this very complicated subject seem have something to do with the other thing, because that lowering of the bond rating actually will affect the schools if indeed they find they pay their bills in mid-term.

CALBREATH: Absolutely.

CAVANAUGH: So it'll make it harder for them to borrow money that they might need not to go into a situation of insolvency


CALBREATH: Absolutely.

CARLESS: And what you said earlier about this idea that the state is going to ride in on a white horse and loan the district $100 million to get out of its problem and come in and start making decisions, it's just -- this has never been tried. This has never been tested. And I really don't think there's any exaggeration. If you want to see California starting to come apart at the seems, look at San Diego unified school district. The most fundamental thing the government does in this state, educating children, and they're going bankrupt. They're very likely to go bankrupt within the next year or two. It's an extraordinary situation

CAVANAUGH: Have they in your estimation run out of options?

CARLESS: I don't think they're run out of options. I just think they've run out of easy options a Hong long time ago. I don't think -- Scott Barnett's got a plan out there that could potentially solve the problem or get very close to solving the problems it involves hugely unpopular decisions that I don't think the political will is there to make. I think the question right now is whether the people on the School Board, whether these five individuals would rather the district goes insolvent or would rather make the very, very tough unpopular decisions that could well end their political careers

ST. JOHN: It seems like the political careers would be ended either way

CARLESS: I think it would. If you go insolvent, if you're able to make a convincing enough case that this wasn't my fault, undoubtedly it reflects badly upon you. It's whether it reflects worse on you than laying into helps of teachers and closing down schools. That's just going to upset everybody. These guys are in an awful, awful position.

ST. JOHN: In the minute, the local control would be lost

CARLESS: That stuff is going to happen anyway, if you go into insolvency

CAVANAUGH: Well, we have to end it there. I'm sure we will be talking about this much more. Thank you, everyone.


CAVANAUGH: Today's Roundtable guests are KPBS senior metro reporter, Alison St. John. Dean Calbreath, reporter and columnist for the San Diego Union Tribune, and Will Carless, investigative reporter with voice of San We're inviting you to join our conversation, 1-888-895-5727. Alison, it was 20 years in the making, and one unanimous vote in the unmaking. The ambitious redevelopment plan for the downtown Navy headquarters on north harbor drive was voted down this week by the California coastal commission. You have been covering this story for quite some time. Tell us what happened.

ST. JOHN: Okay, so this was probably the first time that the critics of this project have seen a major victory. And there was really that feeling in Oceanside when the commission voted this week, unanimously to say this plan no longer meets the California coastal act. It has changed too much in the last 20 years. The commission did vote for it in concept in 1991. But the division has changed, the project has changed, there are enough changes that we have changed our mind and no longer think that this meets the California coastal act. It is just within step in a long process. This is not the end of this project, by any means, and I think that the supporters in some ways have overestimated --

CAVANAUGH: Well, probably because they were so surprised. I mean, it was a surprising vote, wasn't it

>> Yes, it was a surprise. Even the staff of the coastal commission were really unsure but the vote would go. Then for it to be a unanimous vote, it's a relatively new board, and nobody had quite taken the stock of all the coastal commission members and knew quite which way they would jump. So this is an indication in a way of what the California coastal commission may be like in the coming years. And that's significant.

CARLESS: What level of detail are we hooking at in terms of what they're objecting to? Are they literally look at plans on a piece of paper and saying we don't like the way this is designed?


CARLESS: Okay. If it's a 20-year-old design --

ST. JOHN: No, the design is relatively new. 20 years ago, they in theory said that this could happen. But it was back in the mid-200 that they signed -- the Navy signed a contract with Manchester. Put it out to bid, and Manchester won the contract. Everyone was very please because it's a local developer. Then the design came out. And then the criticism began because it is a very dense -- a lot of high-rises, a lot of glass, multistory holts and office bells. It does come very close to the waterfront in a couple of places. There's very little public access. The plans that people thought were pretty much agreed on on having green space down at the edge of the bay there sort of disappeared. Some people said that the plan wasn't really very creative. And this is really such an important site. I want to really make that point, Maureen, that this isn't just any site. This could be the jewel in the crown of San Diego's city on the bay. Nobody notices it now because it's just got some dilapidated Navy buildings on it. It's between the star of India and sea port village on that elbow, it sticks out into the bay. Downtown culminates down. This it could be one of the most valuable piece of property in Southern California

CAVANAUGH: I want to ask dean because you're a business and economic reporter columnist. It's staggering to think about how much this real estate might be worth isn't it?

CALBREATH: It is. It's a very valuable piece of real estate. You could understand about Doug Manchester would want to to this. Of it's right near the Convention Center, so you'd have a lot of hotels that could feed into it the Convention Center, or restaurants that could cater to the conventioniers. On the other hand, it's a valuable piece of real estate monetarily, but also it's a valuable piece of real estate for the image of San Diego. And that's the question: Is that what we want to have our image be? This very crowded place on the waterfront? Or do we want to have a waterfront palisade where you can have people walking through and enjoying the parks and still have nice reasonable developments but maybe not as crowded as the ones that Manchester is --

ST. JOHN: And anchored by a large presumably secure Navy headquarters right there in the middle of downtown, instead of like the Sidney opera house, we would have a Navy headquarters. San Diego's identity is closely tied to the Navy. So I see this as almost like a symbolic battle for the heart of San Diego.

CARLESS: Do you think there's politics at play here too? New coastal commission, faced with this big decision, this chance to play David and Goliath with the federal government. Is there a certain amount here of sort of -- we're going to show them? We're going to show them how tough we are and what position we're at politically as opposed to justide logically?

ST. JOHN: Listening to the comments from the commissioners, there was one commissioner definitely who took a stand and said she felt the federal government -- she was disappointed in the federal government and the Navy for not being more aware of local development and the fact that California is a world leader in being able to design developments which are both environmentally friendly, provide public access, are beautiful, and also key to economic growth. And she pretty much threw the gauntlet down for the federal government and said I'm disappointed this the U.S. government for not being more sensitive to local needs here. Because the fact of the matter is, this land does belong to the Navy. Why? It was given to the Navy back in 1920. So that is where some of the critics are also saying why is the Navy now twistingly our arms to do this project? The reason it has to be so big and dense is because the developer has to be able to earn enough money to build the Navy a new headquarters for free

CAVANAUGH: Let me take the side of the supporters from time to time. I've seen renderings of this project, and it is lovely.

ST. JOHN: It's better than what we have now.

CAVANAUGH: Buildings look great. Lots of them, but they look great. And the idea is that this is going to really boost the economy of San Diego at a time when -- maybe it's a few years out, but at a time when San Diego's economy could use a boost. So is that a valid argument, dean, do you think?

CALBREATH: You know, the thing is what does it boost the economy with? It boosts it with a lot of leisure and hospitality and restaurant and retail workers, which are on the very low end of the scale. And this is not to -- I'm not saying that workers aren't needed. But we put so much emphasis on those workers to a dis-- we put much more emphasis on building that kind of activity than maybe building the stronger more high-paying jobs that maybe we should think about concentrating.

CAVANAUGH: The union wages that we're going to cut anyway, right?

CALBREATH: Yeah, absolutely

CARLESS: Is there any indication that the Navy headquarters part of this would also bring high-ranking bureaucrats into San Diego? Or are they already here?

ST. JOHN: That's a good question. I think the reason they want it right there downtown rather than on a more secure location like on a base, which, by the way, congresswoman Susan Davis is behind them reconsidering that location. The reason they say they want it there is because a lot of it has to do with negotiating civilian-type contracts, defense contracts, and things with city hall. They like the location. They like being in the middle of downtown. And they want to keep it. Is this is some question as it whether it might become a more significant headquarters for terrorism, combating terrorism, which might attract more high-paying jobs. That is true. But I think it is a question as to whether you want to have all these hotels and shops and restaurants right next it a building that could very conceivably be a target


CAVANAUGH: Let me ask you, let's make it clear for our listeners. Are the environmental concerns not necessarily the coastal commission, because I know their concerns also were about marine habitat, and that. But for the environmentalists in San Diego, is it sight-lined to the bay?

ST. JOHN: Yeah, they're worried about the site lines, there are some view corridor, and the design was done with that very much in mind. So the sight lines are infinitely better than what we have now. But do you go ahead and build something, the first design that comes along, which people are not happy with, or is there room to make this better? And there's all kinds of things, a two-acre park, the museum, which is a public amenity, which is right at the back of the complex. So you have to walk through all the shops to get to the museum. And the fact that a lot of them -- there's a root between them and the waterfront, but right up against the waterfront. So this is not saying stop the project! No, we don't want it! And some people have got what I think are somewhat fanciful ideas of large quantities of green space. But there is, I think some room for negotiation. And when you look at what happened at the lane field sight next dooring there was some negotiation, and the developer agreed to move the hotel become 100 and 50 feet. Obviously what this vote has done is opened the door for some morewiggle room in the design.

CAVANAUGH: What does the congressional representatives think about this plan?

ST. JOHN: Dunk an hunter is pretty much in favor of the Navy playing that key role. Upon the person who represents that area, congresswoman Susan Davis, she wrote a letter to the commission saying we all are very proud with our relationship with the Navy. But perhaps this vote could open the doors for more negotiation. And she is in favor of the Navy reconsidering that location. She's taking the security issue seriously.

CARLESS: Do we know what the federal government can do legally? Can they just write a new law that says we don't care what the California commission say? We're going to build whatever we want to.

ST. JOHN: Somebody at the coastal commission did actually say really nobody knows what the effective Navy and federal government is going to do in response to this. And that is a possibility. They have a lot of power, and they are in court at the moment. We haven't talked about the lawsuits, but there are several different lawsuits tying it up. So this is very likely to be yet another lawsuit.

CALBREATH: If the federal government did step in, that is something that would prolong this by years. That would turn into a Supreme Court case. A states' rights versus federal rights case. Of that's probably something both sides would want to avoid.

ST. JOHN: The ninth circuit court right now is reviewing the Navy's contention, I believe, that the coastal commission is inaccurate, that things have not changed that much since 1991. And really all of the sort of details that aring brought up about what's happened in the last 20 years are not significant enough to disqualify this project.

CAVANAUGH: You mentioned lawsuits. How many? Do you know?

ST. JOHN: I don't know exactly how many. I know there are two major ones, one against the developer, and one against the Navy

CAVANAUGH: I see. Could that interfere -- you seem to hint that there could -- this could be negotiated in some way between the developers and the coastal commission to find some common ground without necessarily having to go, as I said, I think back to the drawing board completely.

ST. JOHN: Right.

CAVANAUGH: But is that legal action going to get in the way?

ST. JOHN: Nobody wants -- the Navy is really keen to get this going soon. And the developer, Manchester, wanted to break ground next year although the funding hasn't been discovered yet. So nobody wants major delays. And neither do the critics am everybody wants something to happen there because this has languished for too long. It's a key part of San Diego. It is possible that using the model of what happened just along the waterfront that there might be some concessions. However, you know, when you have a design that's being designed by a major architect, it's not that easy just to sort of set something back a little bit. It probably would require a major redesign

CARLESS: It seems unusual to me, this general concept of having a federal government site, that the only way to get it build is to have a combination of shops and condos to fund it. Look at the new federal courthouse downtown. The federal government came in and said we're going to build a courthouse, and got the money, and there it went. I find that interesting the fact that you would think the federal government's gots billions of $dollars sitting around that it uses to build new bases

ST. JOHN: Not at all. And I'm glad you brought that up. I think one of the key issues in this is that the lease agreement between the Navy and Manchester is closed to the public. It's, you might say, secret. So if Manchester has to build enough in order to be able to then build a Navy headquarters, which could be 4 or $500 million, how much profit on top of that does he make? Since we don't know the terms of the deal, nobody can really assess how much the developer would need to build

CARLESS: And what was their reason for keeping that secret?

ST. JOHN: I believe it's legal, that you cannot force them to reveal

CARLESS: That just makes me want to know now.

CAVANAUGH: Ah! Does anything that happened after the California coastal commission in their rejection of this project seem to you to make the case that the environmental voices in San Diego are getting stronger? Let me start with you Alison and get everybody's take on that.

ST. JOHN: Well, yes. And the class action between the environmental voices and the laborer voices I think is what is creating a certain amount of clout and leverage in some of these negotiations

CAVANAUGH: That apparently wasn't taken as seriously back in the 90s when this was -- I know they didn't have the plans. But when this original idea was given to the commission?

ST. JOHN: Back in '90s, I think people thought downtown -- which was a very different plates. Look how many more people live downtown now. Our whole concept of what downtown is has changed. It used to be more commercial and industrial. Nobody realized that we were going to want to be putting all these people to live down there, and that it would become such a tourist destination. I think the whole attitude to downtown has significantly changed. And let's face if. Back in 1991, the coastal commission staff did not recommend this project. But the commission overruled the staff and said we'll approve it.

CARLESS: I always find it fascinating that the role of things like the coastal commission, that people don't -- general Joe Public sometimes doesn't quite understand or appreciate how much power these organizations have. And the last time I got involved with a decision of the coastal commission was the big toll road that wanted to be built up near San Clementi. And the fact these five individuals can come in and just by the by Bosch on this --

ST. JOHN: Well, I don't know if they have.


ST. JOHN: It could be that this turns into a whimper. It's hard to know. It's justice that is this such a beheme mothal project. And it's got so much at stake. I think the critics were just over joyed that somebody has taken them aside and saying, wait a minute, is this really the best thing for the public?

CAVANAUGH: Before we end, I just want to be clear, it's not just a bump in the road for this project. I mean, the federal government would have to make -- come down pretty hard and say we don't care what the state coastal commission says in order to get this project as it is now conceived to go through,; isn't that right?

ST. JOHN: It would seem. But the Navy, I believe, would like to argue that what the coastal commission's conclusion is is wrong. And they are determined to convince the judge of that fact

CARLESS: Is there any indication that the Navy has another site that it might be considering that it can play blank manship with? Like we can go to this site if you don't get your act together, California?

ST. JOHN: They said the 32nd naval street site is too crowded. One of the opponents showed a map with all the different places it could be, but many of them are underneath the flight path. So this is definitely the best site as far as they're concerned

CAVANAUGH: And we have to move onto our next topic. So I want to thank everyone.


CAVANAUGH: This is KPBS Midday Edition Roundtable. I'm Maureen Cavanaugh. My guests are KPBS senior metro reporter, Alison St. John. Dean Calbreath, reporter and columnist for the San Diego Union Tribune, and Will Carless, investigative reporter with voice of San If you would like to join our conversation, you can give us a call at 1-888-895-5727. And in this part of the show, we'd especially like to know if you intend to transfer your money to a local credit union tomorrow in keeping with bank transfer day. Our number once again is number number. Dean, the idea for bank transfer day here in San Diego and around the nation comes from the occupy movement. What are people being encouraged by them to do?

CALBREATH: Basically, the occupy movement -- you're right, it started with the occupy movement. Although it actualliaus started because of the action of bank of America wanting to charge $5 every time -- or $5 per month for anybody who uses their debit card, basically charging you money to use your own money. There was a lot of anger about that, and the occupy movement turned it into anger against the whole banking system. And I think that it is a sort of -- it represents an outgrowth of the movement, sort of a maturation of the movement in a way. Getting people to take concrete actions, instead of just setting in front of a federal building or in front of a Wall Street brokerage. So far in the past month, 640,000 people have transferred from banks to -- across the nation have transferred from banks to credit unions. And that was largely in response to the bank of America thing. And the credit unions are really encouraging this locally. There's --

CARLESS: Strangely enough!

CALBREATH: Yeah, no, locally, one credit union is sponsoring a party tomorrow, giving away prizes and everything. Another credit union has sort of been the antibank of America saying we'll give you $0.25 per transaction that you use for your debit card. And another credit union has been offering $100 for anybody who switches

CAVANAUGH: Before we get into whether or not this is a good idea or who's0 behind it or whatever, could you give us a brief 101 on the difference between banks and credit unions, and what exactly is the difference?

CALBREATH: Sure. Banks are -- and banks will have their own interpretation. But basically banks are for-profit institutions that are sponsored by investors and everything. Credit unions are officially, and again banks will say Eoh, no, no, they're blurring the lines very but credit unions are officially non-profit organizations that have very specific communities that they are representing. For instance, Navy federal credit union here represents military veterans and family was military, whatever. You know, San Diego credit union has specifically San Diego County -- there's one that's specifically San Diego County employees, there's a union credit union. So there's a lot of different organizations that these are really member organizations rather than banks which are open to everybody, but which also make profits on everybody

MAUREEN CAVANAUGH: I just want to take one call because we do have a caller on the line. We're taking your calls at 1-888-895-5727. Mica is calling from Pacific Beach. And governor, welcome to the show.

NEW SPEAKER: Hello. I just got back from San Diego County credit union and just opened a new account. And I just wanted to tell everyone, it was really easy. And they were really nice and made everything simple

CAVANAUGH: Why'd you do that?

NEW SPEAKER: Well, my mom switched out of her chase account a while back, got into a credit union. And I just hadn't because I was too lazy. But just hearing about everything, and I agree with all the points about the big banks. And they have -- they have great service and a lot of offers.

CAVANAUGH: Mike Athank you very much. I'm just wondering if a lot of people tomorrow -- I mean, if a lot of people tomorrow do mica did today

CARLESS: Mica's the PR guy.

CAVANAUGH: What kind of effect might this have on banks, dean?


CALBREATH: Well, I think that like I said, this was 2/3 of a million people in the last month. That was are more than transferred all of last year, the total of 2010.

CAVANAUGH: In this month alone?

CALBREATH: In October alone, right so that was a major shift. And I think the banks have got to be scared about this. The fact is, bank of America changed its policy. It's like the new coke -- the old coke or whatever. They were you, which shows that they are a bit scare of this growing consumer movement.

ST. JOHN: Didn't bank of America buy country wide, which is one of the culprit, really of the whole housing bubble, which set this whole thing off? It seems like an extremely appropriate strategy to me that finally Occupy is actually doing something which might actually get some attention from the powerful institutions in our economy

CARLESS: What I always find funny about this kind of debate, whenever it comes up is this idea that whenever it comes to talking about banks, it's like people like to think be, well, it's my money. Why should banks be able to charge me fees and do all of this other nasty stuff? And it's, like, banks are businesses, you know? That's what I think gets lost so often on this. Banks are in the business of making money. And it just -- and I think when you look at this Idelogically, the devil is in the details of are credit unions making profits? Are they really doing things that are much more -- whether it's sort of ethical or consumer interested and consumer based than the big banks? I don't know the answer to that question. But I think that's sort of the core of this is the idea that, look, if I'm going to have to pay bank fees, if I'm going to have to lose money in some way, I'd rather I was just -- I'd rather not be giving money to the fat cats I don't like. And I think that's what's driving a lot of people on. Personally, I switched to a credit urine years ago as a result of a major bank, which I won't name, I just got fed up with them. And I think what we're starting to see in this country is the idea that consumers do have an awful lot of power and have an awful lot of effect on the bottom line. And I think if 81 supers get ticked off one too many times by the banks, they're going to go ahead and do this.

CAVANAUGH: Angels calling from San Diego. Welcome to the show.

NEW SPEAKER: Thank you for having me. I just want to say that I'm going to switch, I'm with bank of America, I'm going to switch tomorrow to a credit union. I've been calling around to see the best deal I can get as a student. And my reason for switching is because for years I've been with bank of America since 2001, I haven't liked the service. I think they take advantage of their customers, especially students who don't know all the ins and outs, especially when they come on campus and they give so much money like that. So if we all rally together tomorrow, take our money out of the big banks, we can really have an effect.

CAVANAUGH: Well, angel, thank you so much for the call. Dean, you know, the idea -- I've heard it not just from people who are political activists but I've heard in speaking with people, especially in the real estate industry that they have had a bone to pick against the big financial institutions for a couple years now buzz they say are sitting on a pile of money, and they are not releasing that for loans to stimulate the U.S. economy. You must hear that criticism all the time.

CALBREATH: Absolutely. Yeah, there are a couple things going on. First I want to say that there is -- one of the differences between banks and credit unions is what the caller mentioned. She said she wanted to go there because they have better service. And they do emphasize service a lot. And they're able to because they don't have the pressure from investors. You were right that the banks are in the business to make profit. But they are in the business to make profit for their investors. And so they have a different layer of profit making responsibility than the credit unions. The credit unions don't have to worry so much, don't have to make so many cutbacks in service personnel because they don't have the same kind of pressure. But in terms of the question of the banks sitting on a pile of money, yeah, they have been -- they got a lot of money from the feds during the bailout. Now a lot of that money has been used to pay off obligations that were run up by the country wides and the Wachovias and the other businesses that have gone under and have been taken over by bank of America or chase or Wells Fargo. So they have a lot of obligations, and that's one area their cash is going that the public isn't seeing. What we're see suggest we can't get a car loan right now, it's hard to get a home loan, effect

CARLESS: Dean, I don't know if you know about this. But as far as I'm concerned, the stuff that really ticks me off about the whole destruction of the economy was all this crazy -- what's the proper tomorrow? Where you group all the loans together and sell them to Wall Street brokers, and the credit default swaps and that sort of stuff. But these credit unions, some of them are pretty big. Were they involved in doing that stuff as well? Do we know

CALBREATH: They were involved to a lot lesser extent than the big banks were. Some major credit unions, yes, they may have been involved to that extent.

ST. JOHN: But if country wide must have done that in order to be able to keep going?

CALBREATH: Country wide absolutely did.

CARLESS: Country wide was the grand daddy of it; yeah.

CALBREATH: And this doesn't involve just home loans, it's real estate loans, student loans, credit card loans. We haven't really seen the effect of those bubbles. But the fact is that we have a quadrillion dollars in derivatives throughout the world, which is more than the net value of the world. We have more derivatives than actually all of the assets in the world. And that's the big problem that the banks are facing, that the financial industry is facing

CAVANAUGH: Let me take another call. Merrill is calling us from lakeside. Welcome to the show.

NEW SPEAKER: Hello. Yeah, I just wanted to make one comment. It seems like there is a confusion between banks and credit unions. Credit unions are owned by their members, banks are owned by investors.

CAVANAUGH: Right, right I think dean clarified for us just a little while ago. Thanks very much for the call. Josh is calling from La Jolla. Hi, Josh.

NEW SPEAKER: Hi. I just wanted to make the comment that I'm also switching my bank account from Wells Fargo to San Diego credit union tomorrow. And I feel like if everybody starts doing that, the -- as a group, we're going to have a good impact on the banking industry and show them that after all these years, we're basically fed up with them, the way they're dealing with the economy, and treating us on the housing market and everything else

CAVANAUGH: Thank you very much for the call. Dean, is there a down side to this?

CALBREATH: Well, the potential down side is, you know, these banks are still too "big to fail". The biggest banks in the nation are now bigger than they were previous to 2008.

CAVANAUGH: Bigger than they were than when they were too big to fail?

CALBREATH: Exactly. And if this puts pressure on the banks, they could conceivably fail, and that could bring us back to 2008 again.

CAVANAUGH: Do you think that people will have a hard time dealing with the fact that they're with a credit union now? Are there any tangible differences? You won't have as many ATMs right?

CARLESS: I haven't noticed any, and I switched probably six years ago. And just speaking for myself, I do still have a major bank credit card, though, which is what the majority of the spending is done on. I think it might be a bit more tricky if you have, like, a credit union credit card, the flexibility and everything else. Plus I guess travel suggest always a problem. I've had problems in England when I go home. I think I lost, a card, I lost my debit card, and tried to get my credit union to send it to England. What a joke that was. It just didn't happen for weeks and weeks and I finally got it. Someone like bank of America presumably has better resources to do stuff like that.

CALBREATH: They probably got an office in downtown London

CARLESS: I'm sure, yeah.

ST. JOHN: Speaking of England, I can't help but thinking November the 5th?

CARLESS: Ah, ha. I think that's why they chose that date.

>> That was to overturn the monarchy at this point

CAVANAUGH: Thank you for filling us in. You're right, it was an attack on parliament?

ST. JOHN: The house of lords. The basement of the house of lords

CAVANAUGH: I want to get this call in quickly. Stephanie is calling from San Marcos. Hi Stephanie

NEW SPEAKER: I just wanted to call in and remind people that if they are participating in this bank transfer day tomorrow to be at least genuine and nice to the people workingly at these institutions.

CAVANAUGH: You mean the banks?

NEW SPEAKER: I happen to work at one them, and I just -- I don't want people taking out their frustrations or anger on the people working there.

CAVANAUGH: Fair enough


CALBREATH: Very good point

CARLESS: Great point, yeah.

CAVANAUGH: Thank you, Stephanie,s yes, if you're going to take your money out of a bank, be nice to the people who work there, right?

ST. JOHN: They are the 99%


CARLESS: And the people on the phone who are possibly sitting in mum by or somewhere else

CAVANAUGH: We have to wrap things up. I want to thank my guests on Midday Edition Roundtable, Alison St. John, Dean Calbreath, and will cars, thanks so much

CARLESS: Thank you.

CALBREATH: Thank you.

ST. JOHN: Thank you.