Difficult Times at Our Credit Union

Banks don'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.

Could you provide a source for your anecdote? I find it hard to believe that the FDIC would look at a mere six loans when their own guidelines [1] call for at least eight, and that's with a population of a mere ten loans. For a higher level of precision on any decent loan portfolio the sample size will be at least 50.

Furthermore, having dealt with regulators before, there's always an opportunity to provide written responses with requests for data or an appeal process. Not hard for a bank to argue that a sample size of six isn't representative of their overall lending practices.

[1] (Warning: PDF) https://www.fdic.gov/regulations/compliance/manual/11/XI-10....

I have checking and savings accounts at the Internet Credit Union but I don't use them.

- I'm in NYC. ATMs that don't take a surcharge are few and far between. There are two near my house, at a McDonald'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 "surcharge-free ATMs" because by default it shows all ATMs), which is nice.

- Online banking is done through a website called It's Me 247 (https://obc.itsme247.com/237/). It's frustrating to use — to log in you enter your account number, password, and the answer to a security question (it can't remember your browser). There are no mobile apps, and it doesn'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.

- Their main website is actively broken on my phone (it's locked to 1x zoom and you can't scroll horizontally) due to an incorrectly-used 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 >1 year ago.)

- I can't direct deposit into my savings account because it shares an account number with my checking account.

- There's no way to pay bills or send checks online.

- I called to order checks when I signed up. I never heard back and never got any checks.

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'd probably be Simple, which prides itself on being easy to use.

I wanted to love the IAFCU but day-to-day banking was too frustrating.

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.

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'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.

What's stopping credit unions from being competitive against traditional banks are the regulatory hurdles. For instance, all credit unions' members must have some common affiliation, such as a small geographic area, or a common employer or alma mater. So you can'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't be open to just anyone.

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'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'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'd go back to the members in the form of lower prices.

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.

He mentioned that he didn't want to start a predatory subprime loan shop.

He wanted to offer non-predatory lower interest loans to higher risk clients, in concert with banking services that are difficult to provide to higher risk immigrant clients like checking and savings accounts and debit cards.

But the NCUA wouldn't allow him to set interest rates lower or offer checking/debit accounts.