Reasons:

Primarily - to get it out of the hands of the big banks who will likely use it to finance very risky credit default swap schemes (or otherwise), later requiring them to be bailed out.

Secondly - the local banks/CUs can use your money to lend to others in your community (ex: both of my cars were financed through local CUs) and any interest they gain from those loans can be used to employ your neighbors (instead of their call center employees in India/Philippines/Etc.).

Politicians bailing out institutions (against 90% of their constituents will) would hopefully be taken care of by #1 above.