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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 Kick

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)
- rm_-rf_slash 11y ago
  What costs more to a small institution? Tax or regulatory compliance?
  - rayiner 11y ago
    Banks have to deal with more or less the same regulatory compliance requirements.
    - smcl 11y ago
      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)
      - rayiner 11y ago
        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.
        smcl 11y ago
        So "tough luck if you're the little guy" basically? Seems a little unfair no?
        Goronmon 11y ago
        Sure, it's unfair. But your argument for loosening regulations can't just be "It's too hard for small businesses." I'm sure things like health and safety violations are a burden for small businesses, but they don't get to opt out because solely because they are small. If you can make the argument that specific regulations offer no benefit other than to protect larger businesses that's one thing. But "It's hard" isn't convincing enough to me.
- ensignavenger 11y ago
  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!)
  - rayiner 11y ago
    > A bank pays taxes on profits, sure, but a credit union doesn't have profits A credit union doesn't have "profits" because it is tax-exempt. Like banks they can, and do, run surpluses, which they return to members in the form of above-market interest rates on deposits or as dividends. If they lost tax-exempt status, they would have to pay taxes on the surplus before returning it to members, like banks do on profits before returning it to shareholders.
    - dragonwriter 11y ago
      > A credit union doesn't have "profits" because it is tax-exempt. They can, and do, run surpluses, which they return to members in the form of above-market interest rates on deposits or as dividends. Interest paid is tax deductible for banks, and dividends paid to demand deposit accounts (the way most credit unions distribute them) are deductible for mutual savings banks (the banks most similar credit unions without tax exempt status), so this tax treatment isn't as special as it seems.
- rodgerd 11y ago
  So? Should Linux Torvalds have been required to charge money for his code because it might drive crappy Unix vendors out of business?
MCRed 11y ago
> The only way for this system to be fixed starts at the ballot box. Where are you going to find politicians to vote for who cannot be influenced by money? Not on your ballot, because the one-party-with-two-wings has effectively made it illegal to run a campaign as an alternative. Greens and Libertarians are kept from the debates, kept from the ballot with restrictive measures, and certainly aren't owning the machines that "count" the ballots and determine the elections. (The election fraud from 2000 has never gone away, it just stopped being headline news. It happens in a recent past political election one of the presidential candidates called my house on election night to report their observance of the fraud- in some cases the absolute number of votes they got went down as more votes were counted. A mathematical impossibility.)
- rm_-rf_slash 11y ago
  This is how our political system wants us to feel: ineffectual and powerless. Don't bother voting because none of the options are good. The system can't be fixed so you shouldn't even bother. You end up falling into the trap they set for you. I refuse to give up on democracy, just as I refuse to give up on America.
  - SeoxyS 11y ago
    The USA is not a democracy, it's a representative republic. That's the fundamental difference which means that you can't simply go to the ballot box to fix something. You can go to the ballot box to support people who you believe share your values. Sometimes it works, oftentimes it doesn't. Unfortunately, it's unlikely that the USA will ever become a real democracy, so we have to make the best of the system we currently have.
    - Kinnard 11y ago
      We could create a new system. Why is that never thought to be an option . . . people do do that.
    - dragonwriter 11y ago
      > The USA is not a democracy, it's a representative republic. The US (by Constitutional form) is both a (representative) democracy and a (federal, and democratic) republic. > Unfortunately, it's unlikely that the USA will ever become a real democracy You seem to be using "real democracy" to mean "direct democracy", buy direct democracy is no more real than representative democracy. (And there's a good case to be made that the problems the US has with being an effective democracy are curable while remaining a representative democracy, and that the problems lie largely in the particular electoral system.)
sukulaku 11y ago
> 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 better alternative, no one would keep paying those outrageous charges, and that's why the credit union 'had to be' "regulated"[1] to death. Ever wonder why all banks charge roughly the same fees? [1] "Regulation" is quite a double-speakey word. If you regulate an electric current, you make sure it isn't too strong, and that's where the word gets its positive connotation. But when a government "regulates" anything, it's basically just coercion. "No, you can't offer people this beneficial service. You can't charge less for transfers. You can't give your customers debit cards" and so on. > The only way for this system to be fixed starts at the ballot box. Do you think politicians all over the world don't know that every single person on earth would rather not get fleeced with outrageous fees? They all do, of course, and as evidenced by banks still raping us six ways from Sunday, they don't care. Take any societal problem you see. Is there real evidence to show that they care? Whatever they tell you to get elected doesn't count, by the way. How often do politicians keep their promises? Why would you think the solution to any problem would start at the ballot box?
- webjprgm 11y ago
  It starts before the ballot box, winning over voters. And that takes money.
  - ethbro 11y ago
    It realistically starts and stops at the Supreme Court. Unless they change their "money is free speech" decision, the US stays with a free market political system.
  - sukulaku 11y ago
    You know they pretty much always break their promises, and you understand that your vote doesn't bind them in any way. You see things getting worse each year.. So do you not understand that voting doesn't actually solve anything? Obviously, winning people over into participating in a pointless ritual doesn't help either, nor do the bribes a politician takes to fund the publicity necessary to win people over by lying to them. Think about it.

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)
rm_-rf_slash 11y ago
What costs more to a small institution? Tax or regulatory compliance?
- rayiner 11y ago
  Banks have to deal with more or less the same regulatory compliance requirements.
  - smcl 11y ago
    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)
    - rayiner 11y ago
      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.
      - smcl 11y ago
        So "tough luck if you're the little guy" basically? Seems a little unfair no?
        Goronmon 11y ago
        Sure, it's unfair. But your argument for loosening regulations can't just be "It's too hard for small businesses." I'm sure things like health and safety violations are a burden for small businesses, but they don't get to opt out because solely because they are small. If you can make the argument that specific regulations offer no benefit other than to protect larger businesses that's one thing. But "It's hard" isn't convincing enough to me.
ensignavenger 11y ago
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!)
- rayiner 11y ago
  > A bank pays taxes on profits, sure, but a credit union doesn't have profits A credit union doesn't have "profits" because it is tax-exempt. Like banks they can, and do, run surpluses, which they return to members in the form of above-market interest rates on deposits or as dividends. If they lost tax-exempt status, they would have to pay taxes on the surplus before returning it to members, like banks do on profits before returning it to shareholders.
  - dragonwriter 11y ago
    > A credit union doesn't have "profits" because it is tax-exempt. They can, and do, run surpluses, which they return to members in the form of above-market interest rates on deposits or as dividends. Interest paid is tax deductible for banks, and dividends paid to demand deposit accounts (the way most credit unions distribute them) are deductible for mutual savings banks (the banks most similar credit unions without tax exempt status), so this tax treatment isn't as special as it seems.
rodgerd 11y ago
So? Should Linux Torvalds have been required to charge money for his code because it might drive crappy Unix vendors out of business?

MCRed 11y ago

> The only way for this system to be fixed starts at the ballot box. Where are you going to find politicians to vote for who cannot be influenced by money? Not on your ballot, because the one-party-with-two-wings has effectively made it illegal to run a campaign as an alternative. Greens and Libertarians are kept from the debates, kept from the ballot with restrictive measures, and certainly aren't owning the machines that "count" the ballots and determine the elections. (The election fraud from 2000 has never gone away, it just stopped being headline news. It happens in a recent past political election one of the presidential candidates called my house on election night to report their observance of the fraud- in some cases the absolute number of votes they got went down as more votes were counted. A mathematical impossibility.)

rm_-rf_slash 11y ago
This is how our political system wants us to feel: ineffectual and powerless. Don't bother voting because none of the options are good. The system can't be fixed so you shouldn't even bother. You end up falling into the trap they set for you. I refuse to give up on democracy, just as I refuse to give up on America.
- SeoxyS 11y ago
  The USA is not a democracy, it's a representative republic. That's the fundamental difference which means that you can't simply go to the ballot box to fix something. You can go to the ballot box to support people who you believe share your values. Sometimes it works, oftentimes it doesn't. Unfortunately, it's unlikely that the USA will ever become a real democracy, so we have to make the best of the system we currently have.
  - Kinnard 11y ago
    We could create a new system. Why is that never thought to be an option . . . people do do that.
  - dragonwriter 11y ago
    > The USA is not a democracy, it's a representative republic. The US (by Constitutional form) is both a (representative) democracy and a (federal, and democratic) republic. > Unfortunately, it's unlikely that the USA will ever become a real democracy You seem to be using "real democracy" to mean "direct democracy", buy direct democracy is no more real than representative democracy. (And there's a good case to be made that the problems the US has with being an effective democracy are curable while remaining a representative democracy, and that the problems lie largely in the particular electoral system.)

sukulaku 11y ago

> 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 better alternative, no one would keep paying those outrageous charges, and that's why the credit union 'had to be' "regulated"[1] to death. Ever wonder why all banks charge roughly the same fees? [1] "Regulation" is quite a double-speakey word. If you regulate an electric current, you make sure it isn't too strong, and that's where the word gets its positive connotation. But when a government "regulates" anything, it's basically just coercion. "No, you can't offer people this beneficial service. You can't charge less for transfers. You can't give your customers debit cards" and so on. > The only way for this system to be fixed starts at the ballot box. Do you think politicians all over the world don't know that every single person on earth would rather not get fleeced with outrageous fees? They all do, of course, and as evidenced by banks still raping us six ways from Sunday, they don't care. Take any societal problem you see. Is there real evidence to show that they care? Whatever they tell you to get elected doesn't count, by the way. How often do politicians keep their promises? Why would you think the solution to any problem would start at the ballot box?

webjprgm 11y ago
It starts before the ballot box, winning over voters. And that takes money.
- ethbro 11y ago
  It realistically starts and stops at the Supreme Court. Unless they change their "money is free speech" decision, the US stays with a free market political system.
- sukulaku 11y ago
  You know they pretty much always break their promises, and you understand that your vote doesn't bind them in any way. You see things getting worse each year.. So do you not understand that voting doesn't actually solve anything? Obviously, winning people over into participating in a pointless ritual doesn't help either, nor do the bribes a politician takes to fund the publicity necessary to win people over by lying to them. Think about it.