Difficult Times at Our Credit Union

> an under-documented local Rutgers student...We sought an exception from the NCUA, but they said no.

I don'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'm not.

> We were stunned to find we were the first full service credit union chartered in New Jersey since the NCUA was formed 1970.

I'm not all that surprised: New England is a particularly corrupt and regulation-bound part of the country. It's amazing to me that anyone would do business there or California.

I'm not surprised, although I am saddened, at the failure of their Bitcoin effort. I'm fairly certain than NCUA was concerned about the possibility of money laundering (never mind that it shouldn't be a crime, nor should it be something the regulatory system cares about: it is and it does, and that has consequences).

> 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.

Are those 200-300 healthy or not? Are the ones allowed healthy? Are the ones disallowed unhealthy?

This is the problem with regulation: it's in the regulators' 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.

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.

The archive.org is an important project. This dude seems like a genuinely nice guy who's trying to go out of his way to help the little guy. In fact, I try to bank exclusively with the little guy (check my posting history re: that schpeal). "Mr. Modell and Mr. Kahle said the red flags raised by the N.C.U.A. examiners had been over small discrepancies and record-keeping issues — and often turned out to be factually wrong." I'm going to guess their risk analysis procedure just flagged his institution with 'red flags' as such: "new financial institution, potential violations here, here, and there." Those small discrepancies are important. You're a monetary institition in charge of what's often the only safety net someone has. Even if the 'small discrepancies' were minor, the risk analysis software seemed to do a good job because they caught the oversight. Small or not, I'd be upset if my interest bearing account wasn't paid to the cent, because it would shatter my trust. Their job is to move money around on time and with a very high degree of regulated precision. (In this hypothetical case, of course) the institution failed to comply with are admittedly sometimes onorous minutia.

On a more positive note, you Silicon Valley buds should all group together and open a credit union. I wasn't joking when I said the initial expense is around 100k followed by a few ten k each year. Here[1] you can do it for 50k if you're effectively online only. Credit is so cheap right now, assuming you can issue out mortgages in the fractional method banks can do (e.g., hold a dollar for every ~10 (or around abouts) you lend out in traditionally safe paper like mortgages), it wouldn't take much for you guys to save a _ton_ of money by charging 0% overhead minus the opex of the CU itself.

Also, re: the 'commonality' it can be anything really. Most famously you have any former member of the US armed forces, their spouses, and their ROOMMATES (if they're active duty IIRC) can join. Its been a long time since I looked at the specifics but the 'common ground' you share can be very vague like "yeah we all hold HAM radio licenses" would be a genuine justification.

[1] http://www.ncua.gov/Resources/Documents/CUDev/AcrobatDocumen..., page 7.

The Aristocrats!

Banks don't charge outrageous surcharges and fees to be evil. They do it because providing banking services, especially to small accounts is expensive. In 2011 an average checking account cost $349 for a bank to maintain [0]. Anytime there is an attempt at more transparent pricing or discouraging small customers there is a huge backlash for the public and regulatory bodies like financial protection bureau. Bank of America tried charging a $5 monthly debit fee for accounts less than $5k, 2011 only to drop it shortly after hundreds of thousands of petitions came in opposing the idea. Thr consumer protection agencies would have probably shut that down anyway by fiat.

I understand why a credit union is appealing to some but I personally don't care whether my services are provided by a for profit company. I give my business to the organization that can provide me the best value. Walmart shareholders can keep their 5% pretax margin.

[0] http://www.americanbanker.com/issues/176_238/checking-accoun...

Edit: I get it, it appears as though I'm defending the big banks. I just think an explanation as to the high fees is better than blind populist response of claiming the banks are somehow evil. Or the response that any organization that earns a profit is evil.