11 ms·

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 jawns 11y ago

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 satisfaction. And credit unions have been around a long time, so we know the model works. What's stopping credit unions from being competitive against traditional banks are the regulatory hurdles. For instance, all credit unions' members must have some common affiliation, such as a small geographic area, or a common employer or alma mater. So you can't just create a credit union that competes with the likes of Capital One 360 or other online banks, even though it would be beneficial for that to happen, because the law says it can't be open to just anyone. Although credit unions are perhaps the most successful and widespread example of cooperative businesses in the U.S., we Americans have not really embraced cooperatives, and that's a shame. Look at the U.K., where one of the most popular grocery chains is a co-op, or at Mondragon in Spain. Wouldn't it be awesome to have something like Walmart, but entirely member-owned? Instead of all those profits going to a relatively few wealthy shareholders, they'd go back to the members in the form of lower prices. Technology has made it easier to gather like-minded people to start cooperatives. I would love to see a Kickstarter-like service take it to the next level.

acveilleux 11y ago
Where the laws are more relaxed, credit unions can be competitive. The Desjardins credit union (technically a federation of credit unions) based out in Quebec is a good example, they have 5.8m members and 254B$ of assets. They even have branches in the US, but those are chartered as banks and owned by the federation. That said, it's hard for a cooperatively structured to be nimble and the bureaucracy and internal politics are legendary.
- lostcolony 11y ago
  Banks are known for their nimbleness, lack of bureaucratic red tape, and lack of internal politics?
  - acveilleux 11y ago
    It's all relative, but yeah, any of the big 5 canadian banks are immensely more nimble than desjardins which is internally structured as a federation of credit unions each of which is technically independent.
deleted 11y ago
[deleted]
__alexs 11y ago
> 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.
- EwanToo 11y ago
  Well the bank.. less so now, as the co-op management screwed up so badly
iheartmemcache 11y ago
18 months is about reasonable for a CU. You can open one for under 100k, licenses, access to SWIFT, ability to issue FDIC insured loans at a huge spread. It's no surprise he's getting audited. He's dealing in a contentious ...commodity?currency? (I think the IRS deemed it as currency.) Either way, given the negative publicity that surrounded bitcoin during its emergence (passports and guns for sale? I mean I'm fairly libertarian, but transacting in that currency is just baiting some employee fresh out of law school looking to make his name memorable enough to win when he runs for the junior senator seat a few years down the line.) Combine that with the fact that new businesses tend to get audited far more often than your average MNC who has rigorous accounting journaling procedures in place to ensure they're compliant with the law, thus making him a double-easy target. The NCUA will not give you a heads up if they're going to perform an audit any more than the IRS would. 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... http://www.ncua.gov/Resources/Documents/CUDev/AcrobatDocumen..., page 7.
bko 11y ago
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 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-account-free-checking-debit-fees-1044756-1.html 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.
- humanrebar 11y ago
  > 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.
  - TorKlingberg 11y ago
    Sure, you could run a bank with no branches and no support phone number.
rm_-rf_slash 11y ago
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.
- davedx 11y ago
  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-under-fire-over-claim-ing-helped-write-new-law/ http://www.dutchnews.nl/news/archives/2015/11/dijsselbloem-u...
- deleted 11y ago
  [deleted]
- rayiner 11y ago
  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.
  - toast0 11y ago
    Credit unions are returning most of their profits to their members through dividends (interest), so they shouldn't have a very high net income; so tax exempt status has a low financial impact. (Some of the profit is reserved as a buffer against future losses, and would need yo be taxed for an equal playing field)
rahimnathwani 11y ago
It's funny that you mention the UK, which used to have a number of mutual bank-like institutions called 'building societies'. Many of these became banks about 20 years ago, and former members (holders of mortgage or deposit accounts) received windfall cash payments in exchange for their shares. I don't recall what drove the transformation, but It wouldn't be surprising if those who made the decisions had some upside from either their current or future compensation packages.
- ZeroGravitas 11y ago
  In part the de-mutualisation was driven by the short term gains that could be realised if it happened (at the expense of the long term customers). This led to people signing up as customers, purely so they could vote for this to happen and receive a windfall, so you're right, though it sounds like you thought it was a small number of decision makers at the top, rather than an insurgency of outsiders taking advantage of the co-operative model's democratic structure.
  - rahimnathwani 11y ago
    Yes, I'm curious to know whether the votes were initiated by insiders (executives or long-standing members) or by 'activist carpetbaggers'. AFAIK carpetbaggers' activity was just opening an account and, when the time came, casting a vote.
- aembleton 11y ago
  A lot of the transformation was caused by those who moved to building societies with the intention of changing them to banks and cashing in on the windfall. They were known as carpetbaggers: https://en.wikipedia.org/wiki/Carpetbagger#United_Kingdom https://en.wikipedia.org/wiki/Carpetbagger#United_Kingdom
cmdkeen 11y ago
The UK is also a slightly dodgy example because the Cooperative Bank managed to implode in spectacular fashion mainly because the board didn't have many people with any idea about finance, and their Chief Executive, who had a politcial background, ended up being arrested after being caught by the papers trying to buy drugs. There are some really good examples of building societies over here, Nationwide seems to consistently do retail banking very well. But they are not a panacea.
astazangasta 11y ago
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 BoA, a bank which was directly responsible for massive fraud that caused the housing bubble, they look at me blank eyed and move on. These people have power because we gave it to them.
- ams6110 11y ago
  I absolutely agree. I can see no reason for an individual to use a big national bank. I've always used small local banks or credit unions (I actually moved my accounts to a credit union when my local bank was acquired by Chase). This used to be quite easy to do, since you didn't have direct payroll deposit and never had to worry about covering more than your outstanding checks. Now, with all kinds of automatic transactions most people have, you have to coordinate things a bit more carefully.
  - astazangasta 11y ago
    >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...
    - pm90 11y ago
      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 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 prevent online fraud). Meanwhile, Chase has a nice Android app which gives me instant information about all my transactions. They detect fraudulent transactions immediately. Auto-Pay for bills. Convenience and security wins. Since this is all anecdotal experience: there was a period of time between jobs when they sneakily charged me $5 per month when I did not make a deposit in my checking account. So I do see the evil aspect is there.
rayiner 11y ago
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/Documents/report30702.doc 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).
- jessriedel 11y ago
  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 feasible for non-profit banks to get started and operate successfully, why would we not allow them? (Please put "because the legislators are bought-off"-type arguments aside. What are the reasons people give?) Are grocery co-ops limited in membership?
  - gluelogic 11y ago
    Why put those arguments aside when it seems like that is the primary reason why non-profit banks can not exist?
    - jessriedel 11y ago
      It's a logically separate issue. One discussion at a time.
  - rayiner 11y ago
    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-era-of-greed-meet-americas-good-bank-usaa/252161 http://www.theatlantic.com/business/archive/2012/01/in-the-e....
noja 11y ago
How obscure can the common affiliation be? Does "dislike of hidden charges" count? :)
ch 11y ago
Could someone just create Worldwide Credit Union and just require living on Earth to be the affiliation?
scurvy 11y ago
Is USAA considered a bank or credit union? Either way, they're easily the best financial institution in the US. They are amongst the most tech savvy because they only have a branch in San Antonio, yet their customers are deployed around the world. For those that don't know, USAA was originally setup only for military personnel and their families. Military families get screwed on credit and insurance because they are frequently moving. Their insurance rates were sky high, despite military bases being relatively low crime. So USAA stated offering insurance as a response. It's also non profit as they send you a rebate check every year for premiums minus losses. It's a fantastic company that does great things because they want to help people, not grow huge profits. They were among the first to do ATM fee refunds (use any ATM), they never charged fees for using another ATM, were among the first with scanned check deposits, then smartphone camera deposits. If you're eligible, you really should be using USAA. I prefer them even to the local SF credit unions. Edit: I guess they are both a bank and insurance company.
- itsmillertime4u 11y ago
  They have a branch here in the DC area also, but the can't handle any money there, and are there for more of a presence to help with financial wealth planning.
- linkregister 11y ago
  To provide some balance regarding praise of USAA, they also push unnecessary and predatory "overdraft protection" and require an opt-out to binding arbitration. Some of their business practices as of the last three years have been converging with that of the big American retail banks. Some retail banks have made enormous strides in catching up to USAA's great internet and phone banking. It would be great if someone were to include some information about their executive compensation plan to see how their incentives are aligned in comparison with the large retail banks. Their insurance rates are very competitive and their customer service is stellar. There is a branch in Annapolis, Maryland across the street from the Naval Academy. Just as the Washington, DC branch, they don't handle cash but have a full-service ATM outside.
  - 11y ago
nickpinkston 11y ago
Thanks for mentioning Mondragon, more people need to know about the world's largest federation of co-ops: https://en.wikipedia.org/wiki/Mondragon_Corporation https://en.wikipedia.org/wiki/Mondragon_Corporation
pbreit 11y ago
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.

by jawns 11y ago

acveilleux 11y ago

Where the laws are more relaxed, credit unions can be competitive. The Desjardins credit union (technically a federation of credit unions) based out in Quebec is a good example, they have 5.8m members and 254B$ of assets. They even have branches in the US, but those are chartered as banks and owned by the federation. That said, it's hard for a cooperatively structured to be nimble and the bureaucracy and internal politics are legendary.

lostcolony 11y ago
Banks are known for their nimbleness, lack of bureaucratic red tape, and lack of internal politics?
- acveilleux 11y ago
  It's all relative, but yeah, any of the big 5 canadian banks are immensely more nimble than desjardins which is internally structured as a federation of credit unions each of which is technically independent.

deleted 11y ago

[deleted]

__alexs 11y ago

> 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.

EwanToo 11y ago
Well the bank.. less so now, as the co-op management screwed up so badly

iheartmemcache 11y ago

18 months is about reasonable for a CU. You can open one for under 100k, licenses, access to SWIFT, ability to issue FDIC insured loans at a huge spread. It's no surprise he's getting audited. He's dealing in a contentious ...commodity?currency? (I think the IRS deemed it as currency.) Either way, given the negative publicity that surrounded bitcoin during its emergence (passports and guns for sale? I mean I'm fairly libertarian, but transacting in that currency is just baiting some employee fresh out of law school looking to make his name memorable enough to win when he runs for the junior senator seat a few years down the line.) Combine that with the fact that new businesses tend to get audited far more often than your average MNC who has rigorous accounting journaling procedures in place to ensure they're compliant with the law, thus making him a double-easy target. The NCUA will not give you a heads up if they're going to perform an audit any more than the IRS would. 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... http://www.ncua.gov/Resources/Documents/CUDev/AcrobatDocumen..., page 7.

bko 11y ago

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 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-account-free-checking-debit-fees-1044756-1.html 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.

humanrebar 11y ago
> 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.
- TorKlingberg 11y ago
  Sure, you could run a bank with no branches and no support phone number.

rm_-rf_slash 11y ago

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.

davedx 11y ago
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-under-fire-over-claim-ing-helped-write-new-law/ http://www.dutchnews.nl/news/archives/2015/11/dijsselbloem-u...
deleted 11y ago
[deleted]
rayiner 11y ago
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.
- toast0 11y ago
  Credit unions are returning most of their profits to their members through dividends (interest), so they shouldn't have a very high net income; so tax exempt status has a low financial impact. (Some of the profit is reserved as a buffer against future losses, and would need yo be taxed for an equal playing field)

rahimnathwani 11y ago

It's funny that you mention the UK, which used to have a number of mutual bank-like institutions called 'building societies'. Many of these became banks about 20 years ago, and former members (holders of mortgage or deposit accounts) received windfall cash payments in exchange for their shares. I don't recall what drove the transformation, but It wouldn't be surprising if those who made the decisions had some upside from either their current or future compensation packages.

ZeroGravitas 11y ago
In part the de-mutualisation was driven by the short term gains that could be realised if it happened (at the expense of the long term customers). This led to people signing up as customers, purely so they could vote for this to happen and receive a windfall, so you're right, though it sounds like you thought it was a small number of decision makers at the top, rather than an insurgency of outsiders taking advantage of the co-operative model's democratic structure.
- rahimnathwani 11y ago
  Yes, I'm curious to know whether the votes were initiated by insiders (executives or long-standing members) or by 'activist carpetbaggers'. AFAIK carpetbaggers' activity was just opening an account and, when the time came, casting a vote.
aembleton 11y ago
A lot of the transformation was caused by those who moved to building societies with the intention of changing them to banks and cashing in on the windfall. They were known as carpetbaggers: https://en.wikipedia.org/wiki/Carpetbagger#United_Kingdom https://en.wikipedia.org/wiki/Carpetbagger#United_Kingdom

cmdkeen 11y ago

The UK is also a slightly dodgy example because the Cooperative Bank managed to implode in spectacular fashion mainly because the board didn't have many people with any idea about finance, and their Chief Executive, who had a politcial background, ended up being arrested after being caught by the papers trying to buy drugs. There are some really good examples of building societies over here, Nationwide seems to consistently do retail banking very well. But they are not a panacea.

astazangasta 11y ago

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 BoA, a bank which was directly responsible for massive fraud that caused the housing bubble, they look at me blank eyed and move on. These people have power because we gave it to them.

ams6110 11y ago
I absolutely agree. I can see no reason for an individual to use a big national bank. I've always used small local banks or credit unions (I actually moved my accounts to a credit union when my local bank was acquired by Chase). This used to be quite easy to do, since you didn't have direct payroll deposit and never had to worry about covering more than your outstanding checks. Now, with all kinds of automatic transactions most people have, you have to coordinate things a bit more carefully.
- astazangasta 11y ago
  >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...
  - pm90 11y ago
    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 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 prevent online fraud). Meanwhile, Chase has a nice Android app which gives me instant information about all my transactions. They detect fraudulent transactions immediately. Auto-Pay for bills. Convenience and security wins. Since this is all anecdotal experience: there was a period of time between jobs when they sneakily charged me $5 per month when I did not make a deposit in my checking account. So I do see the evil aspect is there.

rayiner 11y ago

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/Documents/report30702.doc 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).

jessriedel 11y ago
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 feasible for non-profit banks to get started and operate successfully, why would we not allow them? (Please put "because the legislators are bought-off"-type arguments aside. What are the reasons people give?) Are grocery co-ops limited in membership?
- gluelogic 11y ago
  Why put those arguments aside when it seems like that is the primary reason why non-profit banks can not exist?
  - jessriedel 11y ago
    It's a logically separate issue. One discussion at a time.
- rayiner 11y ago
  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-era-of-greed-meet-americas-good-bank-usaa/252161 http://www.theatlantic.com/business/archive/2012/01/in-the-e....

noja 11y ago

How obscure can the common affiliation be? Does "dislike of hidden charges" count? :)

ch 11y ago

Could someone just create Worldwide Credit Union and just require living on Earth to be the affiliation?

scurvy 11y ago

Is USAA considered a bank or credit union? Either way, they're easily the best financial institution in the US. They are amongst the most tech savvy because they only have a branch in San Antonio, yet their customers are deployed around the world. For those that don't know, USAA was originally setup only for military personnel and their families. Military families get screwed on credit and insurance because they are frequently moving. Their insurance rates were sky high, despite military bases being relatively low crime. So USAA stated offering insurance as a response. It's also non profit as they send you a rebate check every year for premiums minus losses. It's a fantastic company that does great things because they want to help people, not grow huge profits. They were among the first to do ATM fee refunds (use any ATM), they never charged fees for using another ATM, were among the first with scanned check deposits, then smartphone camera deposits. If you're eligible, you really should be using USAA. I prefer them even to the local SF credit unions. Edit: I guess they are both a bank and insurance company.

itsmillertime4u 11y ago
They have a branch here in the DC area also, but the can't handle any money there, and are there for more of a presence to help with financial wealth planning.
linkregister 11y ago
To provide some balance regarding praise of USAA, they also push unnecessary and predatory "overdraft protection" and require an opt-out to binding arbitration. Some of their business practices as of the last three years have been converging with that of the big American retail banks. Some retail banks have made enormous strides in catching up to USAA's great internet and phone banking. It would be great if someone were to include some information about their executive compensation plan to see how their incentives are aligned in comparison with the large retail banks. Their insurance rates are very competitive and their customer service is stellar. There is a branch in Annapolis, Maryland across the street from the Naval Academy. Just as the Washington, DC branch, they don't handle cash but have a full-service ATM outside.
- 11y ago

nickpinkston 11y ago

Thanks for mentioning Mondragon, more people need to know about the world's largest federation of co-ops: https://en.wikipedia.org/wiki/Mondragon_Corporation https://en.wikipedia.org/wiki/Mondragon_Corporation

pbreit 11y ago

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.