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Difficult Times at Our Credit Union

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Re: Difficult Times at Our Credit Union

#111

Post by davidjairala »

bridanp wrote: post #91

Not sure this is an aside or not, but I see a lot of big bank versus credit union in the comments, and that'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'll agree that a large part of the rules we have in plac…

Would you say the customer experience was that much better before the regulations in 2008? Cause that hasn't been my experience personally.

Re: Difficult Times at Our Credit Union

#113

Post by snowwrestler »

TDL wrote: post #51
gcb0 wrote: post #10

Earlier quoted context omitted.

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.

Both things are true. Finance is heavily regulated by at least a dozen agencies, but the coverage of those agencies has gaps, and significant overlaps where it's not clear who is supposed to be holding the ball.

To name two examples from the financial meltdown:

- Lending practices at banks are regulated by the Federal Reserve. Lending practices by mortgage brokers financed by i-banks and hedge funds were essentially unregulated. Those are where a lot of the bad loans and securities started.

- Derivatives are normally regulated by the CFTC, but credit default swaps were specifically exempted from that regulation in 2000, on the assumption that other federal regulators would cover the downstream risks under their purview (they did not).

Re: Difficult Times at Our Credit Union

#114

Post by ensignavenger »

rayiner wrote: post #76
rm_-rf_slash wrote: post #54

Earlier quoted context omitted.

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…

The "banks writing the laws" narrative is misplaced in this context. Credit unions are tax-exempt. If you remove the mutuality restrictions applicable to them, they would not be "compet[ing] on honest terms" with commercial banks--they would have a major competitive advantage on the basis of their tax status.

What major advantage exactly does being tax-exempt offer a Credit Union? A bank pays taxes on profits, sure, but a credit union doesn't have profits, so they still wouldn't pay much income tax (no income to tax) even if they weren't tax exempt! They may have to pay more property tax (not sure if they are exempt from that or not) or other taxes, but surely a well ran credit union would not have a significant tax burden if it were not tax exempt. (Paper work might be an issue... but banks and credit unions alike have to do plenty of that anyway!)

Re: Difficult Times at Our Credit Union

#116

Post by sdenton4 »

pm90 wrote: post #92
astazangasta wrote: post #83

Earlier quoted context omitted.

>Now, with all kinds of automatic transactions most people have, you have to coordinate things a bit more carefully. I really hope this isn't the reason large banks have power (inconvenience of switching). With a whimper...

Its kinda a big deal. I have an account with the Credit Union at my university in the Midwest and now I live in Texas. If they had a better online banking presence I would ABSOLUTELY keep my money with them. But their presence on the web is sooo incredibly dated: https://www.uiecu.org/ASP/home.asp . (Its not just the UI and the draconic security measures; I fear that they don't have the right checks in place to preve…

My experience has been that 'larger' credit unions end up looking more bank-like (and even share the same web interfaces these days; probably using the same SAAS provider...), but still without the evil quotient. My current credit union (Golden 1) ran a five million dollar surplus a couple years ago, and just divided it up amongst the savings accounts...

But point being, bigger credit unions are generally a bit more smooth at the edges.

Re: Difficult Times at Our Credit Union

#117

Post by vessenes »

Brewster and Jordan are good folks; idealistic and willing to put their money and time where their mouth(s) are.

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.

This is a top-down perspective from regulatory and law enforcement -- large centralized banks make enforcement (legal and regulatory) much easier.

I'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 'bank-like' their operations are. A small credit union is just going to look 'amateurish' to these examiners, and they have a fundamental duty to make sure that depositors are safe.

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's impossible to bootstrap a financial institution like this in the current environment, even if there are millions of dollars of funding available.

This is super sad.

Re: Difficult Times at Our Credit Union

#118

Post by [deleted] »

huac wrote: post #107
sukulaku wrote: post #95

Earlier quoted context omitted.

> 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 Would? No such calculation is necessary because banks are a state-maintained cartel everywhere - the opportunity for fleecing the masses with those sneaky & outrageous charges is just too delightful to pass up. If people actually had a cheaper and b…

1. Banks are not state-maintained. You can argue that 'too big to fail' means government support for them, but support is not control. 2. Banks charge roughly the same fees for the same reason grocery stores charge roughly the same prices - competition. 3. Coercion is a straw man when considering government activity. Anything you don't like becomes coercive. I don't like that my roommate wakes up before me and distur…

[deleted]

Re: Difficult Times at Our Credit Union

#119

Post by dragonwriter »

jessriedel wrote: post #93
rayiner wrote: post #75

Earlier quoted context omitted.

You're ignoring a very important part of the story: credit unions, unlike banks, are tax-exempt: http://www.treasury.gov/press-center/press-releases/Document... (see page 2). Those "mutuality" restrictions you note are the trade-off for tax-exempt status. Otherwise, the regulations applicable to credit unions and banks are more or less the same (see pages 1-2).

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 the members.)

> We don't have non-profits deliver most services because they wouldn't be efficient and/or couldn't raise capital from investors.

If you are referring to "tax exempt non-profits", we don't have them deliver most services because there are limited categories in tax law of tax-exempt non-profits.

Re: Difficult Times at Our Credit Union

#120

Post by pbreit »

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've always wondered if credit unions were a viable vehicle for progressive thinking in the financial world but it appears, no?

Are companies still using Utah-based "industrial loan corporations"? That used to be an interesting vehicle for providing banking services.

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