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Difficult Times at Our Credit Union

174 点作者 monort超过 9 年前

25 条评论

dang超过 9 年前
The related NYT article is at <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=10626210" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=10626210</a>. The latter thread had many comments but we merged them here.
jawns超过 9 年前
My guess is that, given the choice, practically everyone would prefer to bank with a member-owned cooperative, i.e. a credit union, than a for-profit bank owned by outside shareholders. I mean, think about it: sneaky fees and outrageous surcharges are anathema, because it&#x27;s more important for members to be satisfied with their experience than to wring out every nickel and dime of profit at the expense of customer satisfaction. And credit unions have been around a long time, so we know the model works.<p>What&#x27;s stopping credit unions from being competitive against traditional banks are the regulatory hurdles. For instance, all credit unions&#x27; members must have some common affiliation, such as a small geographic area, or a common employer or alma mater. So you can&#x27;t just create a credit union that competes with the likes of Capital One 360 or other online banks, even though it would be beneficial for that to happen, because the law says it can&#x27;t be open to just anyone.<p>Although credit unions are perhaps the most successful and widespread example of cooperative businesses in the U.S., we Americans have not really embraced cooperatives, and that&#x27;s a shame. Look at the U.K., where one of the most popular grocery chains is a co-op, or at Mondragon in Spain. Wouldn&#x27;t it be awesome to have something like Walmart, but entirely member-owned? Instead of all those profits going to a relatively few wealthy shareholders, they&#x27;d go back to the members in the form of lower prices.<p>Technology has made it easier to gather like-minded people to start cooperatives. I would love to see a Kickstarter-like service take it to the next level.
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c0achmcguirk超过 9 年前
The regulatory burden facing credit unions from the NCUA is not near as bad as what banks face from the FDIC. Right now the FDIC regulators take the stance that your bank is &quot;guilty until proven innocent.&quot;<p>One bank was getting examined to determine if it was engaging in unfair lending practices. The regulators pulled 6 loans at random from the bank&#x27;s portfolio. 3 loans were to men, 3 to women. Then they looked at the average interest rate on the loans to the men, the 3 on the loans to women. They found a .5% difference between the male and female averages (the men had the lower rate).<p>The regulators fined the bank several thousand dollars and required it to adopt new processes to ensure that future loans were &quot;fair.&quot;<p>Had the regulators looked closer, they would have noticed that the three random loans to men all went to older men with high credit scores...and each male was in a white collar job (doctor, lawyer, etc.). The loans to women, which were pulled at random, were each to younger women, just starting their careers. These were auto loans to a first time car buyer, etc.<p>The regulators didn&#x27;t care about the details and punished the bank anyway. You are guilty until proven innocent, and they don&#x27;t expend a lot of effort trying to prove you innocent.<p>In this day and age of big data, a bank or credit union&#x27;s best bet is to use the power of business intelligence to continually prove that it is lending fairly in the community and climate that it dwells.
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wjnc超过 9 年前
It&#x27;s often a lot cheaper, at least in the Netherlands, to buy an unused banking license than to actually jump through all the hoops to get a new license. Reading this, this regulator seems to have a lot of leeway to propose arbitrary restrictions thus hampering business in the interest of protecting customers. It&#x27;s hard to do a cost-benefit on this type of customer protection by the regulator.<p>Related reads:<p>* Rule of Law in the Regulatory State by John Cochrane [1]<p>* WebMD versus FTC [2]<p>[1] <a href="http:&#x2F;&#x2F;johnhcochrane.blogspot.nl&#x2F;2015&#x2F;08&#x2F;rule-of-law-in-regulatory-state.html" rel="nofollow">http:&#x2F;&#x2F;johnhcochrane.blogspot.nl&#x2F;2015&#x2F;08&#x2F;rule-of-law-in-regu...</a> [2] <a href="http:&#x2F;&#x2F;www.scmagazine.com&#x2F;dismissed-labmd-case-could-impact-ftc-authority&#x2F;article&#x2F;454278&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.scmagazine.com&#x2F;dismissed-labmd-case-could-impact-...</a>
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raverbashing超过 9 年前
Whenever people push for more unbound regulation, this is what happens.<p>The big players can hire another lawyer and get the regulators for a tennis match at that fancy club while the small players drown in paper.<p>Ah, and also this: &quot;. As an engineer, when I looked at how the transaction systems work, I was shocked to see few technological safeguards. I imagine there is major fraud activity. Ironically, the bankers and regulators need exactly the technologists that they are pushing away.&quot;
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Sidnicious超过 9 年前
I have checking and savings accounts at the Internet Credit Union but I don&#x27;t use them.<p>- I&#x27;m in NYC. ATMs that don&#x27;t take a surcharge are few and far between. There are two near my house, at a McDonald&#x27;s and a bodega. According to the locator, only one ATM in all of Manhattan takes check deposits. An iPhone app called CU24 ATMs can find them (be sure to switch the filter to &quot;surcharge-free ATMs&quot; because by default it shows <i>all</i> ATMs), which is nice.<p>- Online banking is done through a website called It&#x27;s Me 247 (<a href="https:&#x2F;&#x2F;obc.itsme247.com&#x2F;237&#x2F;" rel="nofollow">https:&#x2F;&#x2F;obc.itsme247.com&#x2F;237&#x2F;</a>). It&#x27;s frustrating to use — to log in you enter your account number, password, and the answer to a security question (it can&#x27;t remember your browser). There are no mobile apps, and it doesn&#x27;t work with Mint. There is a mobile site, but like the desktop site you have to log in with your account number, password, and a security question every time you use it.<p>- Their main website is actively broken on my phone (it&#x27;s locked to 1x zoom and you can&#x27;t scroll horizontally) due to an incorrectly-used &lt;meta&gt; tag. Jordan himself wrote back to my email after a few days to say that he was working on mobile support, but the website was never fixed. (This was &gt;1 year ago.)<p>- I can&#x27;t direct deposit into my savings account because it shares an account number with my checking account.<p>- There&#x27;s no way to pay bills or send checks online.<p>- I called to order checks when I signed up. I never heard back and never got any checks.<p>In the end, I was never able to switch from Chase, which has clearly-marked ATMs all over the city (most of which accept checks) and a nice mobile app. If I were going to use another bank, it&#x27;d probably be Simple, which prides itself on being easy to use.<p>I wanted to love the IAFCU but day-to-day banking was too frustrating.<p>On the other hand, I had no idea they had all of these regulatory difficulties, and their mission to provide banking to the under-served sounds an order of magnitude more important than keeping people like me happy.
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jellicle超过 9 年前
I am a member of a credit union and support them whole-heartedly.<p>And I think it&#x27;s great that we scrutinize new wanna-be banks and make sure they aren&#x27;t a pump-and-dump fraud scheme. Because in the absence of such regulation, something like 100.0% of new banks would be pump-and-dump fraud schemes.<p>Which one is more likely, assuming you know nothing about Kahle: that Kahle is trying to make an honest buck serving an underserved market, or that he&#x27;s trying to copy what this guy is doing:<p><a href="http:&#x2F;&#x2F;business.financialpost.com&#x2F;news&#x2F;fp-street&#x2F;the-russian-ex-convicts-viral-financial-scheme-that-might-be-behind-bitcoins-surge" rel="nofollow">http:&#x2F;&#x2F;business.financialpost.com&#x2F;news&#x2F;fp-street&#x2F;the-russian...</a><p>&quot;People are falling over themselves to sign up.&quot;<p>If you aren&#x27;t prepared to get your ass ridden by regulators, <i>you aren&#x27;t prepared to be a bank</i>. You aren&#x27;t good enough to offer banking services to the public.
eggoa超过 9 年前
Am I missing something? They say they have &quot;$1 million in donations spent ... and $1 million in the bank to back any bad loans&quot;. For a bank&#x2F;CU this sounds like pocket change. Later they say they have &quot;almost unlimited capital&quot;. What gives?
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zeveb超过 9 年前
I&#x27;m sympathetic to his concerns, and I applaud him for putting his money where his mouth is. Some comments:<p>&gt; an under-documented local Rutgers student...We sought an exception from the NCUA, but they said no.<p>I don&#x27;t know why he would expect to lend money to an illegal alien, nor why he expects the government to let him deal with someone whose very presence is a violation of the law. I should be surprised that a state university admits someone who has not been admitted to the state which owns that university, but I&#x27;m not.<p>&gt; We were stunned to find we were the first full service credit union chartered in New Jersey since the NCUA was formed 1970.<p>I&#x27;m not all that surprised: New England is a particularly corrupt and regulation-bound part of the country. It&#x27;s amazing to me that anyone would do business there or California.<p>I&#x27;m not surprised, although I <i>am</i> saddened, at the failure of their Bitcoin effort. I&#x27;m fairly certain than NCUA was concerned about the possibility of money laundering (never mind that it shouldn&#x27;t be a crime, nor should it be something the regulatory system cares about: it is and it does, and that has consequences).<p>&gt; I see a system as unhealthy if regulators put 200 to 300 institutions out of business every year for decades on end while only allowing a few to start.<p>Are those 200-300 healthy or not? Are the ones allowed healthy? Are the ones disallowed unhealthy?<p>This is the problem with regulation: it&#x27;s in the regulators&#x27; interest to be as strict as possible, because any failure will be harshly punished (in the press, in the civil service, and in the courts), while success has no reward.<p>Kahle has had an unpleasant introduction to the real world. Regulation has costs, typically hidden from idealists; they are revealed to him, because he tried to do something new.
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bridanp超过 9 年前
Not sure this is an aside or not, but I see a lot of big bank versus credit union in the comments, and that&#x27;s just not really the case here in my opinion. I work for a large regional bank and I see a lot of similarities in this story to my own company, especially in the number of audits being requested and the rules they are having to follow (Bitcoin for one). I&#x27;ll agree that a large part of the rules we have in place are self inflicted: some we asked for and some we caused in the aftermath of the financial crisis. These constant audits we&#x27;ve been faced with since the 2008 time period just chew up enormous amounts of time that we could better spend with innovattion and making the customer experience better overall. It&#x27;s really unfortunate that his idea of creating a financial institution with real innovation is being stopped by bureaucracy that is probably 80℅ unnecessary regulation.
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panglott超过 9 年前
Why was this &quot;a new kind&quot; of credit union? It seems like it was an ordinary credit union that briefly toyed with the idea of BitCoin.
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Kinnard超过 9 年前
Can I say that this is all actually my fault? My company was the first Bitcoin company offered services by IAFCU. I made the mistake of speaking to a reporter at WIRED about it. Within hours regulators had the noose set. Had I not opened my mouth, IAFCU could have built up enough strength to tackle its opponents.<p>The polices and structures in this country are not oriented toward mutual benefit or utility, they are oriented toward entrenched interests.
coldcode超过 9 年前
Banks don&#x27;t like competition or new ideas. Regulators have an easier time attacking small potatoes than for example JP Morgan, which can generally do whatever they want.
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Spooky23超过 9 年前
There is a more nuanced story here. Blaming NCUA for the decline in small credit unions doesn&#x27;t really tell the story.<p>Credit unions generally weren&#x27;t underwriters of mortgages -- they were small savings institutions serving a community that wrote mostly small consumer loans with easier underwriting standards.<p>Nowadays, getting consumer financing is pretty trivial. So I don&#x27;t need a CU to underwrite Christmas.<p>Also, the definition of &quot;community&quot; is watered down as to be meaningless. The credit union that I&#x27;m a member of is open to anyone living in like 9 counties in my area and is the 4th largest bank in terms of assets in the region.<p>So why would I join or start the &quot;BigCo Helpdesk employees CU&quot; when I can get most of the customer benefits and more services from a bigger CU?<p>I think the expectations here that these guys would suddenly appear and be writing mortgages in a short period of time is an unrealistic goal, and probably damaged their credibility with the regulators. The same regulators are easy scapegoats because they can&#x27;t talk back.
_Codemonkeyism超过 9 年前
Can someone explain what was the idea to serve the under-served that archive.org should do this?
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openfuture超过 9 年前
The system is so broken it&#x27;s not even funny.
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vessenes超过 9 年前
Brewster and Jordan are good folks; idealistic and willing to put their money and time where their mouth(s) are.<p>As far as I can tell, the reality is pretty much as they describe: there is negative appetite for new banking institutions of any sort in America.<p>This is a top-down perspective from regulatory and law enforcement -- large centralized banks make enforcement (legal and regulatory) much easier.<p>I&#x27;m sure that of the 5,000+ changes requested by the NCUA most were bullshit. But, there are many, many standards that modern banks adhere to -- and groups like the NCUA do tier out responsibility to credit unions based on their size, and how &#x27;bank-like&#x27; their operations are. A small credit union is just going to look &#x27;amateurish&#x27; to these examiners, and they have a fundamental duty to make sure that depositors are safe.<p>What Brewster and Jordan seem to have discovered, and I think this is an important thing to know, is that the burden imposed means that it&#x27;s impossible to bootstrap a financial institution like this in the current environment, even if there are millions of dollars of funding available.<p>This is super sad.
bitshiffed超过 9 年前
The number of US credit unions thrown around is a fairly misleading. The majority of decreases in this number are mergers, not CUs being &quot;shut down&quot;. A more useful number may be the total number of US credit union members over the same period of time.<p>The credit union that disappears form the official count usually doesn&#x27;t see much more than a name change, and adding new services &amp; members. This usually results in better service for both original CUs members; a combination of branch locations, ATMs, and services from both of the original CUs.<p>I&#x27;ve also never heard of &quot;force them to merge their assets into bigger credit unions&quot;. Would be very interesting to hear more specifics about this, if it actually means something more than &#x27;hassle them so much that they find a larger CU to merge into, on their own, just to escape&#x27;.
myth_buster超过 9 年前
The bureaucracy seems to be just a Façade to prevent competition (and consequently innovation).<p>I&#x27;m not an economist but the more and more I read up on the matter following the cracks that showed up after the crisis of &#x27;07-&#x27;08, the more disillusioned I become.<p>There was a lot of optimism regarding Bitcoin being a deflationary currency affecting change from outside the system but it&#x27;s going down the same route. The big players (Conbase&#x2F;Circle) in this field are just being absorbed by the existing system and will loose their outsider advantage.
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bumpercrop超过 9 年前
Before the 1980&#x27;s mortgage lending was limited to the credit unions and other member owned institutions like S&amp;Ls. This regulation had been put in place after the Great Depression of 1929, in order to limit speculation in housing. This regulation had largely worked, and housing prices were largely flat in that era. Regan deregulated the banks and this led directly to the failures in the S&amp;L&#x27;s later in the 80&#x27;s. It also led to the wild boom &amp; bust cycles we have seen in the housing markets.
javajosh超过 9 年前
George Orwell noted in 1984 that to <i>really</i> control a population, you control their language - eliminate the words that describe the behaviors and views you disagree with.<p>Economically, businesses provide &quot;words&quot;, degrees of freedom that people exercise when they spend or act. Banking is ugly because there are some &quot;words&quot; we don&#x27;t want people to use, like derivatives, or over-leveraging. But the banks themselves then use this safety mechanism to eliminate or weaken the words that would threaten them, like cooperative banks.<p>In the end, it boils down to Congress. The Executive has a lot to say about it too. Perhaps as technology improves we can install a Panopticon in Wall Street and Washington, reducing the cost and risk of regulatory enforcement. And if they protest we can say: well, what do you have to hide?
acjohnson55超过 9 年前
Sounds like kind of a nightmare. But on the other hand, a depository bank &#x2F; credit union is a tough area to try to innovate. It&#x27;s not like a hedge fund, where all the participants have to be wealthy enough in the first place to take the risk that it goes south. I wish there were a better answer, but I want both innovation and a high degree of safety.
gcb0超过 9 年前
i think the first step here, since they accepted defeat at some level, is to start releasing names of everyone signing those letters or visiting them. giving names that newspapers can go after and get names higher up is always helpful.
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BallinBige超过 9 年前
Elizabeth Warren needs to see this!
easytiger超过 9 年前
If you want to set up a subprime loan shop (which it seems he did) just do it. Don&#x27;t hide it as a community benefit
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