US credit union regulator has crushed Internet Archive's non-predatory, game-changing financial institution
Every even BoingBoing post:
“Hey! Check out this latest government fiasco/waste/oppression/foolishness/warcrime!!”
Every odd BoingBoing post:
“Hey guys! You know what it would be totally awesome if we handed more power to? THE GOVERNMENT!!”
This could be an advocacy job for community economic development anti-poverty lawyers in New York. Is there information about professional assistance the project received?
There might also be exploration of community-based support for adapting alternative currencies (e.g., Ithaca Dollars, service credits).
Edit: Sorry. It’s New Jersey.
The Legal Aid Society — Community Development Project
The Community Development Project (CDP) provides support for three client groups: low-income not-for-profit organizations, low-income entrepreneurs, and low-income housing cooperatives.
Areas of service include:
Forming and advising low-income co-ops
Did you know…
Each year, CDP provides legal and technical assistance to more than 100 start-up businesses for low-income clients, grassroots not-for-profit organizations, and low-income housing cooperatives.
When two immigrant siblings approached CDP, they dreamed of opening a Caribbean restaurant in Harlem. One was a home-health aide struggling to support her family, and the other an unemployed chef. CDP guided the pair through each step of the business process, helping with loan applications, equipment purchases, lease negotiations, and operating licenses. Thanks to CDP’s help, the restaurant was soon up and running, providing higher incomes for its owners, and generating five new jobs in the Harlem community.
The credit union that I have had for 30 years got bought by a monolith that immediately imposed a fee schedule and outsourced the customer service.
Piss does not travel down hill alone … my credit union seemed to be right there with it.
I’m only there still because I don’t want to move institutions and have this happen again.
You forgot every third post: “Buy this cool new useless gadget!”
Since credit unions are member-owned, how can it simply be bought? Did somebody own a larger share which they sold?
There are different types. Some are fully member owned and controlled. Some are run by a board of directors. They can be chartered federally or in certain states. They can have different bylaws governing them, including who can sell the entity to another one. Etc. They are by no means a one size fits all type of organization.
'tis true: BoingBoing is dialectical!
If I understand correctly, the NCUA only has jurisdiction over its own member organizations, and you don’t need to be one to do business as a credit union. For example, my (excellent) credit union isn’t federally insured, it’s insured by a nonprofit insurer.
Modell and Kahle might should look into alternatives to bank^WCongress-controlled insurance; the banking industry has been trying to undermine credit unions at the federal level for years now, and I wouldn’t be at all surprised to find their sticky thumbprints on the NCUA.
Your reply to this is correct, they are member owned, so there is not the payday bonanza’s that corporations or regular banks have for selling out. What we found is the NCUA can crush credit unions and force them to merge into others. 200-300 credit unions are crushed every year, and only a few are allowed to start. Not healthy.
As I understand it, credit unions do not need to insure with the NCUA, and there are advantages to not insuring with them, but the NCUA still handles making and enforcing rules on at least federal credit unions. At least with federal credit unions I do not think you can escape them. Not since 1970.
hello_friend: the Internet Credit Union of this article received pro-bono help from dozens of organizations: other credit unions, lawyers, accountants. It was unbelievable the help we received. But alas, it was not enough to survive the onslaught.
Does this make you disappointed in Boing Boing?
This seems like a bit of a mixed situation.
We certainly need more member-owned banks to take on the poor service and horrible fees of the majors, but it sounds like this start-up came up against a number of regulations that are there for some very good reasons.
Bitcoin-based accounts are always going to be controversial to a bank regulator, because the whole “anonymous transmission of funds” thing is totally in conflict with any sort of anti money laundering regulations (indeed, bitcoin itself is part of a political project to make tax evasion incredibly easy). A new bank with weak controls on that sort of thing is a gift to people who are trying to hide the proceeds of crime, so I’m not surprised that that this did not go down well.
Once they were already on the regulator’s radar for that first thing, trying to move into international money transfers would also have raised a few questions- This is an area that is also watched carefully, because international money transfers are often used in 419 fraud, and for the transmission of criminal proceeds out of the country. The bank’s focus on migrant workers from Mexico, combined with these other weaknesses would probably have led the regulator to suspect that they were in a position to be exploited by the drug trade.
So, while I see the need for new banks serving the population, I’m not exactly convinced by the “crushing regulation” angle that we’re taking on this one.
Edit- some typos.
Yeah, you gotta be too big to fail before they let you off for messing around with fraud and money laundering.
As in, every odd post: look what evil is being done by some part of the government. Every even post: look what good some part of the government could do. Surprising that some folks are opposed to the government doing more good, and less evil.
Technically correct, but missing the bigger picture.
BoingBoing is pretty consistent about being against the private possession of government power by a minority of individuals and companies.
Personally I am not in favour of giving power to the government, but I am even less in favour of most of that power being in the hands of unelected plutocrats.
I’m thinking that the report should have interviewed the agency’s overseeing these decisions or at least read those reviews.
You don’t just accept a contended story at face value- that’s being the steno pool for a particular business interest.
Credit Unions exist because banks moved away from traditional banking into exotic investment vehicles and investment banking. This was to protect and service small savers better - and without the risk in investment banking we saw leading to the crash and closure of thousands of banks. Credit Unions didn’t have that level of crashing - provide larger levels of insurance on your savings and generally provide lower cost service and interest rates.
This is because they’re structured as traditional savings and loans.
If you want to do creative financial instruments with higher risk - you don’t start a credit union - then complain because it’s a credit union.