Difficult Times at Our Credit Union • Hacker News Board

Re: Difficult Times at Our Credit Union

#51

Post by TDL » Wed, Nov 25, 2015, 2:41 PM UTC

gcb0 wrote: post #10

raverbashing wrote: post #4

Whenever people push for more unbound regulation, this is what happens. 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. Ah, and also this: ". 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 an…

because 2008 made out clear that no oversight works just fine. those are laws to protect laws placed to protect banks et al long before. the original laws give some state insurance for a very cheap price, which can easily be abused if someone start a bank/union, give lots of loans to a partner and then crash said bank/union. ... which is exactly what the 2008 was about if you stop believing all banks were surprised b…

I keep hearing this argument, 'no oversight', and I have yet to see proof of it. Finance remains the most heavily regulated industry, as it has for decades.

Re: Difficult Times at Our Credit Union

#52

Post by myth_buster » Wed, Nov 25, 2015, 2:43 PM UTC

The bureaucracy seems to be just a Façade to prevent competition (and consequently innovation).

I'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 '07-'08, the more disillusioned I become.

There was a lot of optimism regarding Bitcoin being a deflationary currency affecting change from outside the system but it's going down the same route. The big players (Conbase/Circle) in this field are just being absorbed by the existing system and will loose their outsider advantage.

Re: Difficult Times at Our Credit Union

#53

Post by humanrebar » Wed, Nov 25, 2015, 2:44 PM UTC

bko wrote: post #49

jawns wrote: post #28

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 sat…

I agree there should be less regulatory hurdles for credit unions. Unfortunately this would require essentially some form of deregulation which is unlikely in this political environment. 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…

> In 2011 an average checking account cost $349 for a bank to maintain

From the article:

"The single biggest cost, Israel says, is the cost of bank branches and ATMs. Another 20% is spent on back-office functions, including maintaining call centers and payment operations."

It seems like this is all about bad workflows and customer service... which are technical issues, not inherent business needs. There are probably technical solutions to these problems that would drive the cost per customer down dramatically. Perhaps going forward, there will be more incentive to innovate on this front.

...or maybe there's enough regulation out there that it doesn't really matter.

Re: Difficult Times at Our Credit Union

#54

Post by rm_-rf_slash » Wed, Nov 25, 2015, 2:45 PM UTC

jawns wrote: post #28

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 sat…

These "regulatory hurdles" that prevent credit unions from competing with banks were not created in a vacuum, they were created by the banks. No amount of Kickstarting will solve the problem of our political system's fetish for financial domination. The cause is obvious: as a for-profit institution, a bank has the money to lobby for preferable laws, let alone the laws they write themselves. If people began switching from banks to credit unions en masse, the banks would probably calculate that it would be cheaper and easier to manipulate the regulatory environment to inhibit credit unions than to compete on honest terms.

The fact is, as long as the financial system controls the political system, regulation will favor the banks. The only way for this system to be fixed starts at the ballot box.

Re: Difficult Times at Our Credit Union

#55

Post by davedx » Wed, Nov 25, 2015, 2:48 PM UTC

rm_-rf_slash wrote: post #54

jawns wrote: post #28

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 sat…

These "regulatory hurdles" that prevent credit unions from competing with banks were not created in a vacuum, they were created by the banks. No amount of Kickstarting will solve the problem of our political system's fetish for financial domination. The cause is obvious: as a for-profit institution, a bank has the money to lobby for preferable laws, let alone the laws they write themselves. If people began switching…

This is true. There was a scandal here in the Netherlands the other week where ING had literally written a law giving big banks huge tax breaks.

The Finance minister basically rubber stamped it.

http://www.dutchnews.nl/news/archives/2015/11/dijsselbloem-u...

Re: Difficult Times at Our Credit Union

#56

Post by EwanToo » Wed, Nov 25, 2015, 2:49 PM UTC

__alexs wrote: post #42

jawns wrote: post #28

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 sat…

> where one of the most popular grocery chains is a co-op Their parent groups also runs a bank, electrical retailer, funeral directors, travel agents and solicitors.

Well the bank.. less so now, as the co-op management screwed up so badly

Re: Difficult Times at Our Credit Union

#57

Post by cwmma » Wed, Nov 25, 2015, 2:50 PM UTC

bko wrote: post #49

jawns wrote: post #28

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 sat…

I agree there should be less regulatory hurdles for credit unions. Unfortunately this would require essentially some form of deregulation which is unlikely in this political environment. 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…

A corporation at the end of the day has it's owners interests at heart, with a large bank like Bank of America their owners and their customers are separate groups and their interests may be odds. When the customers AND the owners are the same interests tend to align and you are less likely to be in a situation where you feel your bank does not have your best interest at heart.

Re: Difficult Times at Our Credit Union

#58

Post by zhte415 » Wed, Nov 25, 2015, 2:51 PM UTC

c0achmcguirk wrote: post #18

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 "guilty until proven innocent." 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's portfolio. 3 loans were to men, 3 to women. Then they looked at the…

On why this doesn't make sense:

This doesn't make a lot of sense, as sampling post-Enron (not just banks, anyone), should follow a SOX-404 type of methodology (and banks internally, at least in the US, tend to follow this sampling methodology).

On why this does make perfect sense:

What might have really happened is the bank didn't want to push this, as the regulator were holding something else to their head, or might hold something else to their head (which they may also be unaware of) and [the bank] wants to be seen as a cooperative, not uncooperative, institution.

This is extremely likely.

It isn't like a regulatory body can instantly understand a bank's business. They can't come in at a micro-level and try to understand the books (at least, for a larger bank). There's not the organisational understanding level there. So, an uncooperative institution gets hit by fines and warnings against directors.

Small level non-infraction which may blow-up later (related or unrelated), the bank thinks just take the hit and don't fight it. A smaller organisation may really be worried they're not doing something right (but they don't know what) so this gives some time to get things in order. A larger organisation... similar.

This also benefits the regulators (not to push if the bank put up their hands for a minor crime) as it is super easy for a highly complex organisation to obstifucate things later, if they want to, if they see the regulator as somewhat pesky. In this case, the regulator will have to be extremely sure of their case and push things through legal channels often at a country's executive level, and then things also get difficult. For the case of a rural credit cooperative, the regulator may see them as a general social good (as in 'good thing') but needing to be punched on the nose a few times to keep in line. And then there's internal pressure and politics within a regulator of what 'good' actually is.

>a bank or credit union'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

Completely agree.

Re: Difficult Times at Our Credit Union

#59

Post by titzer » Wed, Nov 25, 2015, 2:56 PM UTC

myth_buster wrote: post #52

The bureaucracy seems to be just a Façade to prevent competition (and consequently innovation). I'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 '07-'08, the more disillusioned I become. There was a lot of optimism regarding Bitcoin being a deflationary currency affecting change from outside the system but it's going down the same route. The bi…

This is probably more often the case than not. Regulation is drafted to protect entrenched players and establish permanent streams of income. Most organizations really don't like having a dynamic environment that could make them obsolete on short time scales.

Re: Difficult Times at Our Credit Union

#60

Post by rahimnathwani » Wed, Nov 25, 2015, 2:56 PM UTC

bko wrote: post #49

jawns wrote: post #28

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 sat…

I agree there should be less regulatory hurdles for credit unions. Unfortunately this would require essentially some form of deregulation which is unlikely in this political environment. 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…

That $349 figure is misleading. It is comprised almost 100% of fixed costs, like executive salaries and buildings, which do not vary with the number of accounts.

Banks charge fees because they seek to maximise profits. Those fees don't have to relate closely to costs. I'm not saying this is good or bad, just that it is so.