Difficult Times at Our Credit Union • Hacker News Board

Re: Difficult Times at Our Credit Union

#131

Post by Jtsummers » Wed, Nov 25, 2015, 7:01 PM UTC

phdp wrote: post #130

Jtsummers wrote: post #110

Earlier quoted context omitted.

Lending to high risk clients, on its own, is not predatory lending. If I'm willing to accept the risk, I could loan $5k to someone with a poor credit history and frequent unemployment at a low interest rate. I have to be somewhat altruistic to do this, and most banks and lenders aren't. I have to be willing to write it off. It sounded like this was the market they wanted to be in. Poor people needing money, instead o…

The issue is that you are using your customer deposits to make the loans. When the loans default and they aren't paying a high interest rate to compensate you for the higher default rates, you don't have the money to redeem those deposits at face value, and then the NCUSIF (FDIC for credit unions) will have to step it. The regulators would rather prevent that in the first place.

Right, I understand why they couldn't make the loans (regulators not allowing it). But if someone were to establish themselves in a way that could make the sorts of loans this credit union wanted to, they wouldnot be predatory.

> If you are making loans to high risk clients, this is predatory lending.

What I was specifically replying to. High risk loans are not predatory loans. Predatory loans are high risk, high interest, unfavorable terms (short repayment periods, high-value collateral for low-value loans, aggressive collection tactics, etc.). We have to be clear when we talk about a topic to not mix the terms in a way that skews our discussion from the actual circumstances. That way lies miscommunication and misrepresentation of those involved.

Re: Difficult Times at Our Credit Union

#132

Post by rayiner » Wed, Nov 25, 2015, 7:05 PM UTC

smcl wrote: post #102

rayiner wrote: post #90

Earlier quoted context omitted.

Banks have to deal with more or less the same regulatory compliance requirements.

Banks are rarely small institutions - even the smaller ones will have dozens of people employed whose sole job is to handle regulatory compliance (UK finance perspective here)

So what? Difficulty with regulatory compliance is intrinsic to being a small entity. That doesn't mean the regulations are stacked in favor of banks.

Re: Difficult Times at Our Credit Union

#133

Post by rm_-rf_slash » Wed, Nov 25, 2015, 7:16 PM UTC

Yakimoto wrote: post #122

rm_-rf_slash wrote: post #115

Earlier quoted context omitted.

Trivializing sexual assault is extremely poor form.

Continue to trivialize it more by using it to beat everyone around [including randoms on the internet] with your smugness.

I suspect you missed the parent comment before it got flagged.

Re: Difficult Times at Our Credit Union

#134

Post by rm_-rf_slash » Wed, Nov 25, 2015, 7:20 PM UTC

kbenson wrote: post #126

rm_-rf_slash wrote: post #115

Earlier quoted context omitted.

Trivializing sexual assault is extremely poor form.

I feel for both sides of this argument. Trvializing something traumatizing that people feel strongly about is not good, but I'm not sure using it in this context is exactly trivializing. The commenter could have said "banks still kill us with fees us six ways from Sunday" and most people would not say they were trivializing murder. Also, I'm not sure when sexual assault became worse than murder, but at some point in…

In case you missed the flagged comment, my case was with the way that comment was presented, in which the parent commenter's request was dismissed as political correctness without any consideration to context. Therefore, trivializing.

Re: Difficult Times at Our Credit Union

#135

Post by Kinnard » Wed, Nov 25, 2015, 7:32 PM UTC

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.

The polices and structures in this country are not oriented toward mutual benefit or utility, they are oriented toward entrenched interests.

Re: Difficult Times at Our Credit Union

#136

Post by kbenson » Wed, Nov 25, 2015, 7:39 PM UTC

rm_-rf_slash wrote: post #134

kbenson wrote: post #126

Earlier quoted context omitted.

I feel for both sides of this argument. Trvializing something traumatizing that people feel strongly about is not good, but I'm not sure using it in this context is exactly trivializing. The commenter could have said "banks still kill us with fees us six ways from Sunday" and most people would not say they were trivializing murder. Also, I'm not sure when sexual assault became worse than murder, but at some point in…

In case you missed the flagged comment, my case was with the way that comment was presented, in which the parent commenter's request was dismissed as political correctness without any consideration to context. Therefore, trivializing.

I saw it, but I took your comment "trivializing sexual assault" as also applying towards your reasoning for the statement "I also resent your use of 'rape' in that context." and my comment was meant to address both.

Re: Difficult Times at Our Credit Union

#137

Post by function_seven » Wed, Nov 25, 2015, 7:41 PM UTC

setpatchaddress wrote: post #128

astazangasta wrote: post #72

Earlier quoted context omitted.

I bank with SF Fire Credit Union. They offer services to any SF resident. They gave me a line of credit, offer mortgages, online banking, free checking and saving, reimbursement for ATM fees. In other words, there is no reason to prefer Bank of America to them. So why does much of SF still use Darth Vader's bank? Americans have no one to blame but themselves. When I tell people they should divest their savings from B…

If I move out of SF, what happens? That's the problem for a lot of people.

Nothing happens, I bet. I'm still with a credit union that was affiliated with an employer I left over 10 years ago. That employer doesn't even exist anymore, but I still bank with that credit union.

Once a member, always a member.

EDIT: I think I misunderstood your point. If you're talking about being close to a branch or whatever, then that's also not necessarily a concern. The closest branch for my CU is 350 miles away. But the Co-op network and the website together cover 100% of my needs.

Re: Difficult Times at Our Credit Union

#138

Post by jessriedel » Wed, Nov 25, 2015, 7:47 PM UTC

dragonwriter wrote: post #119

jessriedel wrote: post #93

Earlier quoted context omitted.

Honest question: Why can't there just be non-profit banks? We don't have non-profits deliver most services because they wouldn't be efficient and/or couldn't raise capital from investors. And once investor come in, their profits are taxed. But there's nothing that in-principally stops a charitable organization from opening a non-profit car repair shop which runs with no net profit. If, for whatever reason, it's feasi…

> Honest question: Why can't there just be non-profit banks? There can be. If you mean, why can't there be "tax-exempt non-profit banks", the reason is because the tax code doesn't allow it (though no-capital-stock member-owned banks seem to be effectively untaxed, except on transactions subsidized by federal assistance to such banks, if they actually distribute their operating surplus to demand deposit accounts of t…

I must be unaware of an important distinction here. Non-profits don't pay taxes, so non-profit banks are automatically tax-exempt, right? (Put aside issues of tax-exempt status of donations to non-profits; credit unions don't take donations.)

Maybe here's another way to formulate my question: why can't a credit union operate as a for-profit bank, but just structure their company so that it's committed to never earning a profit and hence never paying much taxes? (It's perfectly legal for corporations to pursue ends besides maximizing shareholder value, so long as they are publicly disclosed, popular misconceptions notwithstanding.) In other words, why do credit unions bother to satisfy the legal requirements of being credit unions?

Re: Difficult Times at Our Credit Union

#139

Post by jessriedel » Wed, Nov 25, 2015, 7:48 PM UTC

gluelogic wrote: post #99

jessriedel wrote: post #93

Earlier quoted context omitted.

Honest question: Why can't there just be non-profit banks? We don't have non-profits deliver most services because they wouldn't be efficient and/or couldn't raise capital from investors. And once investor come in, their profits are taxed. But there's nothing that in-principally stops a charitable organization from opening a non-profit car repair shop which runs with no net profit. If, for whatever reason, it's feasi…

Why put those arguments aside when it seems like that is the primary reason why non-profit banks can not exist?

It's a logically separate issue. One discussion at a time.

Re: Difficult Times at Our Credit Union

#140

Post by jessriedel » Wed, Nov 25, 2015, 7:50 PM UTC

rayiner wrote: post #100

jessriedel wrote: post #93

Earlier quoted context omitted.

Honest question: Why can't there just be non-profit banks? We don't have non-profits deliver most services because they wouldn't be efficient and/or couldn't raise capital from investors. And once investor come in, their profits are taxed. But there's nothing that in-principally stops a charitable organization from opening a non-profit car repair shop which runs with no net profit. If, for whatever reason, it's feasi…

I'm not aware of any law precluding not-for-profit banks. E.g. USAA's banking arm is a quasi not-for-profit bank: http://www.theatlantic.com/business/archive/2012/01/in-the-e... .

This is a very useful example, thank you. What exactly is the benefit credit unions derive from satisfying the legal requirement of credit unions, rather than just following the sort of incorporation that USAA uses? Can't they avoid taxes on corporate income by just running with negligible profit?

EDIT: So I'm reading through your link above. They mention the obvious way that nominally for-profit corporations could run at zero-profit by returning all excess funds in the form of interest to depositors:

> In contrast, mutual corporations are owned by their depositors, and the equity of a mutual corporation is derived solely from retained earnings. Because depositors are the owners, payments to depositors can include both interest and an equity return to depositors in their role as owners. While depository institutions are generally permitted to deduct interest paid on deposits, mutual thrifts are also allowed a deduction for amounts paid or credited to their depositors as dividends on their accounts, including amounts that represent an equity return, if such amounts may be withdrawn on demand subject only to customary notice of intention to withdraw.

Why don't credit unions just become non-profit and do this?