Forum Post: What would it take to start our own OWS BANK
Posted 11 years ago on June 8, 2012, 11:20 a.m. EST by know1
(210)
This content is user submitted and not an official statement
If we don't know, lets find out.
We could change the world, by lending on the kind of projects we want
If we want to occupy wall street we should really occupy it, or at least think and talk about it
or would our good training in self censorship tell us, dont even go there
banking does sound pretty dry
State owned bank, doesn't sound much worse than that
Who needs emancipation anyway
OK , State owned, like north dakota, like ellen browns thing, sounds great to me, sounds like side stepping the system, rather than nationalizing the banks ( like geo proposes) ,
To start an OWS bank, the bank would have to comply with over 14,000 pages of regulations, Sarbanes-Oxley, and Frank-Dodd.
To do that you nee a compliance expert and a gaggle of lawyers. You need to be sure to file a lot of paperwork...
Part 1002 (Regulation B) Equal Credit Opportunity Act
Part 1003 (Regulation C) Home Mortgage Disclosure
Part 1004 (Regulation D) Alternative Mortgage Transaction Parity
Part 1005 (Regulation E) Electronic Fund Transfers UPDATED
Part 1006 (Regulation F) Fair Debt Collection Practices Act
Part 1007 (Regulation G) S.A.F.E. Mortgage Licensing Act—Federal Registration of Residential Mortgage Loan Originators
Part 1008 (Regulation H) S.A.F.E. Mortgage Licensing Act—State Compliance and Bureau Registration System
Part 1009 (Regulation I) Disclosure Requirements for Depository Institutions Lacking Federal Deposit Insurance
Part 1013 (Regulation M) Consumer Leasing
Part 1014 (Regulation N) Mortgage Acts and Practices—Advertising
Part 1015 (Regulation O) Mortgage Assistance Relief Services
Part 1016 (Regulation P) Privacy of Consumer Financial Information
Part 1022 (Regulation V) Fair Credit Reporting
Part 1024 (Regulation X) Real Estate Settlement Procedures Act
Part 1026 (Regulation Z) Truth in Lending
Part 1030 (Regulation DD) Truth in Savings
Part 201 (Regulation A) Extensions of Credit by Federal Reserve Banks
Part 204 (Regulation D) Reserve Requirements of Depository Institutions
Part 206 (Regulation F) Limitations on Interbank Liabilities
Part 207 (Regulation G) Disclosure and Reporting of CRA-Related Agreements
Part 208 (Regulation H) Membership of State Banking Institutions in the Federal Reserve System
Part 209 (Regulation I) Issue and Cancellation of Federal Reseve Bank Capital Stock
Part 210 (Regulation J) Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire
Part 211 (Regulation K) International Banking Operations
Part 212 (Regulation L) Management Official Interlocks
Part 214 (Regulation N) Relations with Foreign Banks and Bankers
Part 215 (Regulation O) Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks
Part 218 (Regulation R) Exceptions for Banks from the Definition of Broker in the Securities Exchange Act of 1934
Part 219 (Regulation S) Reimbursement for Providing Financial Records; Recordkeeping Requirements for Certain Financial Records
Part 220 (Regulation T) Credit by Brokers and Dealers
Part 221 (Regulation U) Credit by Bankers and Persons other than Broker Dealers for the Purpose of Purchasing or Carrying Margin Stock
Part 222 (Regulation V) Fair Credit Reporting Act
Part 223 (Regulation W) Transactions Between Member Banks and Their Affiliates
Part 224 (Regulation X) Borrowers of Securities Credit
Part 225 (Regulation Y) Bank Holding Companies and Change in Bank Control
Part 227 (Regulation AA) Unfair or Deceptive Acts or Practices
Part 228 (Regulation BB Community Reinvestment
Part 229 (Regulation CC) Availability of Funds and Collection of Checks
Part 231 (Regulation EE) Netting Eligibility for Financial Institution
Part 232 (Regulation FF) Obtaining and Using Medical Information in Connection with Credit
Part 233 (Regulation GG) Prohibition on Funding of Unlawful Internet Gambling
Part 235 (Regulation II) Debit Card Interchange Fees and Routing
Part 238 (Regulation LL) Savings and Loan Holding Companies
Part 239 (Regulation MM) Mutual Holding Companies
Part 241 (Regulation OO) Supervised Securities Holding Company Registration
Part 243 (Regulation QQ) Resolution Plans
Part 328 Advertisement of Membership
Part 330 Deposit Insurance Coverage
Part 370 Temporary Liquidity Guarantee Program
601 — Short title
602 1681 Congressional findings and statement of purpose
603 1681a Definitions; rules of construction
604 1681b Permissible purposes of consumer reports
605 1681c Requirements relating to information contained in consumer reports
605A 1681c-1 Identity theft prevention; fraud alerts and active duty alerts
605B 1681c-2 Block of information resulting from identity theft
606 1681d Disclosure of investigative consumer reports
607 1681e Compliance procedures
608 1681f Disclosures to governmental agencies
609 1681g Disclosures to consumers
610 1681h Conditions and form of disclosure to consumers
611 1681i Procedure in case of disputed accuracy
612 1681j Charges for certain disclosures
613 1681k Public record information for employment purposes
614 1681l Restrictions on investigative consumer reports
615 1681m Requirements on users of consumer reports
616 1681n Civil liability for willful noncompliance
617 1681o Civil liability for negligent noncompliance
618 1681p Jurisdiction of courts; limitation of actions
619 1681q Obtaining information under false pretenses
620 1681r Unauthorized disclosures by officers or employees
621 1681s Administrative enforcement
622 1681s-1 Information on overdue child support obligations
623 1681s-2 Responsibilities of furnishers of information to consumer reporting agencies
624 1681s-3 Affiliate sharing
625 1681t Relation to state laws
626 1681u Disclosures to FBI for counterintelligence purposes
627 1681v Disclosures to governmental agencies for counterterrorism purposes
628 1681w Disposal of records
629 1681x Corporate and technological circumvention prohibited
And there is more where that came from!
Whoa! It's almost like the government is inhibiting people from starting competing banks! Imagine that!
Exactly!
someone did their homework let me add one other requiement a shit load of money
Sarbanes Oxley applies only to public companies (the ones whose shares are trades in the open market). If it's a privately held bank, then no sarbanes oxley.
True but the other 14,000+ pages of regs apply to all lending agencies.
Occupy San Francisco plans on opening a credit union, and I do remember that someone in Occupy the SEC talking about attaching itself to a small regional bank if they could pursuade that institution to mirror the ideals of the Occupy movement.
http://skimthat.com/651/occupy-san-francisco-starts-their-own-credit-union
This is exactly what I am talking about. The regulations that exist today make what they want to do nearly impossible. Sarbanes Oxley requires you to have more employees than many can afford due to separation of duty rules. The amount of paperwork required to comply with regulations is overwhelming.
Their is a huge difference between wanting to do something and actually doing it. Right now all I see is a dream and a FaceBook page.
The amount of regulations and red tape make the idea of a small start up like this very difficult. The unintended consequences of all this regulation is that it protects the big banks from seeing any competition.
In our area, over the past 5 years, most of the smaller community banks are either closing or selling out to the big banks.
Everything good in life begins as a dream. I am not saying that it will be easy to open a credit union, and/or having an existing regional bank alligning itself to our ideals. But like I said in another comment, don't underestimate some of the people in thiis movement. I recently attended a teach-in on economics at Bryant Park in NYC. It was conducted by a uni prof from Drew University who was a whiz. She is only one of such people who support this movement. Just like most everything else though, I would imagine the rules, and regs were written for the big banks who want to hold their near monopoly on banking, so yes we have formidable obstacles to overcome.
I understand there are some smart people. What I am saying the hurdle gets higher every year. I am sure that professor does not want to quit his job to help run the credit union.
Every time a banker of corporate executive does something wrong we bail them out and add regulations. The executive gets of scot-free, the shareholders pay any fines (who are usually pension holders, and congress and another 7,000 pages of regulations.
There was a time when citizens could get together, pool their money and start a credit union or savings and loan in a day. Those days are long gone.
There are many intelligent people here who could easily be doing something else making more money. For them, like us it is a matter of priorities, and I would not be surprised in the least if someone like that professor took on a job that was somewhat below their level of education to be a part of history, a good history.
I am not saying it cannot be done. I would not however say the idea is historic.
There are already thousands of non profit credit unions. There are dozens od non profit community based credit unions in the SF area:
http://www.mission.coop/about/
https://www.self-helpfcu.org/communitytrust/about-us/who-are-we-
http://www.necfcu.org/
http://www.sffirecu.org/about-us/history
http://www.redwoodcu.org/site/about.html
Yes i know there are many credit unions around the country. In fact I joined one late last year. CUs seem to be more community based, and if their ideals matched those of OWS, perhaps we could just give them our seal of approval which at some point they may seek.
The obvious problem here being that since OWS has no leadership and no formal organization of any sort, there isn't actually anyone to which they can apply for that approval, nor is there anyone with the authority to grant it. This is a case where being a leaderless, essentially anarchist organization has some downside.
Yes we are essentially an anarchical, leaderless movement that for now has to concentrate on putting pressure on the system, and educating people on how rotten it has become. It is my belief that for the most part we have to stay outside the system to keep the fervor of this revolution burning hot. That means getting out in the streets. We do have a lot of talented people here though that are exploring ways to better this corrupt system, and/or putting more pressure on it. If indeed these people are altruistic to the principles of this struggle...well I don't think that is so bad.
You're wrong about big banks liking regulations. Those regulations are put in place to control the actions of banks and place a lot of restrictions on what they can do. The banks don't like the rules because of the restrictions, and because complying with them is very costly. Commercial banks would like nothing better than to see most of those rules and regulations go away.
However, all those regulations are intended to protect depositors and borrowers (even if they don't do a very good job sometimes). So, if an OWS financial institution were to be true to its ideals, it would do whatever it took to scrupulously comply with all of them, and would do so gladly, which would mean hiring a very large staff of accountants and lawyers and internal auditors and compliance officers to make sure that all of the consumer protections embodied in those laws were being properly complied with. So it would have generate the money to pay for all of that, along with money necessary to comply with rules regarding operating reserves (you always have to have some cash on hand to cover losses), operation of a massive secure computer system, and of course, deal with the inevitable lawsuits from disgruntled consumers. Along with all of your normal business costs like payroll, benefits, taxes, rent,electricity and so on.
None of this stops new banks and credit unions from forming, by the way. New banks start up all the time, and the legal process isn't all that difficult. What you need that is difficult to get is a ton of startup capital to get things rolling and pay the bills until some income starts rolling in. With as few as a few dozen employees you're going to have payroll alone of a couple of million dollars a year or more. You have to loan out a lot of money at 3% to cover that, not even to think about all of your other expenses.
Solve the capitalization problem, and the rest is relatively easy. Except, of course, actually making enough of a profit to stay solvent and in business. Everybody here seems to think that's a lot easier than it really is.
The Banking Lobby is one of the most powerful in the country. They ask for and get the regulations they want. JoeTheFarmer is correct about large banks eliminating competition. The Glass-Steagall Act allowed for competition by stopping the interstate expansion of larger banks. When that was repealed by the Banking Lobby, we got our too big to fail institutions that got that way by gobbling up the competition.
OWS to enter banking? Careful what you wish for. Money corrupts.
Ah, but the little banks want to get gobbled up. The usual scenario is to get together some investors and start a local bank with a view to making it successful enough to get bought by a larger bank. That's how the initial investors cash in on their investment, and getting bought up was part of the plan from day one. It's the same thing they do in Silicon Valley. Every entrepreneur's dream is to make enough of a splash to get bought out be Google or Facebook or another of the whales with a ton of cash to spend.
In both cases, the big boys aren't the least little bit afraid of competition from some dinky startup. You'll probably never get big enough to get onto their radar screen, but if you do, they'll just scoop you right up and assimilate you. And an OWS bank would be the one in a million that wouldn't jump at the chance to get assimilated -- you walk away from it with a ton of cash if you bought in at startup.
Re Glass-Steagall, sure they got some rules changed in a big way, and if they can do it again, no doubt they will. But that's a long stretch from saying they like all those zillions of pages of rules. They most certainly do not. If they had their druthers, all of them would go away.
Ah, but the little banks want to get gobbled up....Every entrepreneur's dream is to make enough of a splash to get bought out be Google or Facebook or another of the whales with a ton of cash to spend.
Really???
Every entrepreneur who understands money knows that having a pile of cash is not what being 'rich' is all about. Owning the means to generate piles of cash, the business, is true wealth. You don't sell the goose that lays the golden eggs for a few eggs. You keep the goose and pass it down to your next generation.
There is no doubt that some startups are in existence to sell out. But to make a blanket statement that all the little banks want to get gobbled up doesn't fly. Show me some proof.
In both cases, the big boys aren't the least little bit afraid of competition from some dinky startup.
They absolutely are. This is clearly seen in the Pharmaceutical Industry. That little startup could have the patent for the next big selling drug like prozac or viagra. If not taken over they have the potential to be a major competitor. In banking it could be a new financial instrument developed.
But that's a long stretch from saying they like all those zillions of pages of rules. They most certainly do not.
You missed the point again in banking. Those zillions of pages of rules makes entry into the market prohibitive to a startup bank. To an already established bank, they are of little hindrance. You are right that if they had their way there would be no or few rules.... but we tried that little experiment already.
Lessee:
Those small banks are held by investors who cannot legally be made so sell out to a bigger bank. If they want to remain independent, as banks in farming communities often do, there's no way to prevent them from doing so. The only way for you to gobble them up is to offer those investors enough enough money to induce them to sell out. And yes indeed, selling out to a big bank is very frequently part of the game plan, often the central goal. That's why little banks come and go (other than mismanagement that makes them insolvent, but that's another discussion).
Same goes for pharma startups. Getting a promising drug through clinical trials is a ten year, multi-billion dollar effort. Startups don't generally have that kind of money, even with deep-pocket investors, so the goal is to get some promising compound, get intellectual property rights to it, and then get absorbed by a bigger company with the money to commercialize it. The bigger company makes it very attractive -- you're set up as an independent subsidiary, lots of control over your own activities, much bigger and nicer lab to work in, massively bigger R&D budget. Oh, and buckets of cash and stock in your new owners for you and all of your employees, whom you've been paying with worthless stock options for the last five years. Even in cases where the pharma startup has really deep pocket investors, this is true -- venture capitalists recoup their investment by sale of their stake to some other established company with a lot of money -- they are most definitely not interested in trying to run a pharma company. Big pharma companies are usually comprised of a great many subsidiaries acquired through this process. And again, it's all voluntary -- nobody can force you to sell out if you don't want to, and once in a while somebody with enough money behind them doesn't.
Anybody who thinks that all of those regulations are not a problem for established banks (or for that matter, in any industry) is simply naive. Compliance costs, fines and penalties, lawsuits and regulatory actions and all of the other downstream effects impose very substantial costs and drags on these businesses. They are forced to employ large numbers of personnel and expend large sums of money attempting compliance, and still more on the effects of non-compliance. This big-business-like-lots-of-complicated-laws stuff is silliness, folks.
All those rules aren't prohibitive to startup banks, they're prohibitive to amateurs. Banks start up all the time, and it's usually the scenario I described: Savy investors with a ton of money led by some banking pros who know how to get it all going, work it hard for a few years until its successful, sell out to a big national operation, repeat process.
Entrepreneurs do indeed understand money. And what they understand is that that big ol' pile of cash you got from selling out can be put to new and interesting uses in other startups. You can't do that if it's all tied up in the operations of some other company and isn't liquid -- you need cold, hard cash, not a good-looking balance sheet. Take SpaceX, the company that just sent that supply capsule to the space station. The guy that's bankrolling it made his money as one of the founders of PayPal. But the reason he's got billions of dollars to spend building rocketships is because he sold out his interest in PayPal and walked away with a ton of cash to use on new ventures.
I think you're confusing what are called lifestyle businesses with commercial entrepreneurial ventures. Sure, if you own a giftshop or a family restaurant or a farm, you want to leave it to the kids (of course, OWS wants confiscatory inheritance taxes to inhibit this, but that's a different discussion). Commercial ventures don't work that way. Startup capital is almost always obtained by granting shares in the business to investors, whether they be venture capitalists, the general public or your parents. Because most startups fail, those investors are taking a big risk and they expect to be compensated for that risk, and not twenty years down the road, either. And almost all of them expect that that compensation will take for form of a massive, short-term profit through a buyout in the form of either 1) purchase of their stake by a larger company or 2) a public offering where their stake is sold to the general public, like the recent Facebook IPO.
I hate to burst the bubble, man, but that's how it really works.
Lots of text, no proof.
Just a few anecdotal tales for evidence.
I've worked as a management consultant for the last 20 years and three of the industries I specialize in are banking and finance, pharma and high tech. I know these industries inside out. Now let's hear your creds, my big-talking friend.
You can find them in my profile. Creds do not make for proof either.... as for big talking, well thats your game. I asked for proof for your statement that "Ah, but the little banks want to get gobbled up." not your opinion.
I really haven't got the time today to write a footnoted research paper for you, and frankly, this discussion has already consumed far too much of a sunny summer day, so I'm going to go plant some tomatoes.
I'll just say this: one of the issues with this forum and with OWS in general is that people make statements and take positions based upon what they suppose the world to be or what they would like it to be, without having troubled themselves to gain much knowledge of what the facts actually are; and are hostile to and dismissive of either opinions or facts to the contrary. It's a free country and you can certainly do that if you choose, but it doesn't change the facts. They are independent of anyone's opinion, and if OWS thinks that it can alter both public opinion and public policy whilst ignoring them or pretending that something else is true, it's doomed to failure.
This is one such case. If you choose to do so, you can continue to believe that big banks are somehow engaged in an evil cabal to absorb smaller banks against their will, but it just ain't so. Except when a bank becomes insolvent and its assets are sold to someone else by the FDIC, all of those smaller banks are being sold to the big operators freely, by investors who will profit handsomely from it. And what I've said about pharma and high-tech is likewise true whether anyone likes it or not. And that's the way all of those folks like it. It's what they intended.
Oh the dramatics. I didn't ask for a footnoted research paper. I asked you to back up one of your blanket statements with proof. I guess thats too much to ask.
It's either accept your word on this or nothing. Yup its a free country, feel free to post blanket opinions and when challenged on them go into a semi-tirade against OWS and run to plant tomatoes.
Here’s some reading material for you.
The small banks that have trouble almost always have it because of bad loan portfolios, either in residential mortgages or in commercial real estate.
The ones that want to sell for any reason other than just cashing in their chips and banking the profit usually do so because Dodd-Frank is an expensive pain in the ass or because all the new federal limits on the fees they can charge have reduced profitability too much.
Note that nowhere in here is there any allegation by anybody that big banks are engaging in predatory practices with respect to smaller ones or gobbling them up against their will. That’s because that’s not happening.
My tomatoes are fine, thank you.
http://seekingalpha.com/instablog/552445-fawadb/101372-6-easy-steps-to-buying-a-small-bank
Six easy steps for a private investor who wants to buy a small bank or invest in one; also a discussion of how the process works and how investors make money at it
http://www.forbes.com/sites/thestreet/2012/03/14/4-banks-ready-to-sell-out/
it’s a seller’s market out there for banks, meaning maximum profit for sellers
http://www.bankbrokers.net/
Wanna sell your bank or buy somebody else’s? Here are some guys to help you do it. Note the "exit strategy" section, which means "leaving with as much money as possible."
http://www.foxandhoundsdaily.com/2012/03/too-small-to-succeed/
Why small banks sell out or merge: not pressure from big banks, but costs related to Dodd-Frank compliance (the product of the allegedly pro-consumer democratic congress)
http://www.huffingtonpost.com/2010/03/19/how-to-start-your-own-ban_n_497261.html
Huffington Post on how easy it is to start a bank
http://www.ehow.com/how_2062432_start-bank.html
how easy it is to start a bank and how profitable they are
http://www.americanbanker.com/bankthink/operating-revenue-community-banks-1038365-1.html
Community bank profits are being squeezed, not by big banks but by low interest rates and federal controls on the fees they can charge
http://www.investmentnews.com/article/20120122/REG/301229981#
How smaller banks are thriving below the regulators’ radar
http://blogs.reuters.com/felix-salmon/2012/02/16/a-private-stock-market-for-small-banks/
A whole new private stock market in which small banks can raise capital through stock sales
The Daily Beast 8/27/2009 on why small banks fail:
Why are small banks failing more than big ones? Well, bigger institutions have clearly been propped up by the Feds. If Citibank were a 20th of its size, it would have been put out of its misery a long time ago. It would have had the same fate as IndyMac or Washington Mutual. The little guys have gotten into trouble not because they got involved in the subprime-mortgage-related security fiascoes, but because prices on even good loans have fallen by 50 percent. That's a lot of loans to go underwater. For the most part, the small banks weren't caught in buying problematic securities. They got into trouble the old-fashioned way: by making loans that people couldn't repay. Another part of the story is that smaller banks often are heavily involved in local commercial real-estate—shopping centers and strip malls. Those have been overbuilt and are in decline as well. As best as I can tell, that's what explains the experience of Georgia's banks, [which] had their share of residential real-estate problems.
I have to post here because of I can't reply to your long post, out of reply levels....
It's all rather interesting and I will have to go through it in depth, but from what I can see...
Ah, but the little banks want to get gobbled up. The usual scenario is to get together some investors and start a local bank with a view to making it successful enough to get bought by a larger bank.
None of it deals with what you posted. Instead it deals with small banks that have gotten themselves in trouble and will be bought at a killing. Not startups designed to be flipped as implied by your statement.
No so. First, with respect to your immediate point:
Small banks get into trouble for one or more of three reasons:
Poor underwriting practices leave them with too many non-performing loans;
Excessive compliance costs related to new government regulations have killed their profitability;
Profitability has been killed by federal law limiting fees they can charge for various services; or
Profitability has been killed by low interest rates due to a combination of Fed policy and market conditions.
My point here is that loss of small banks has nothing to do with being them gobbled up against their will due to predatory practices by large banks, as you implied. It's due to a combination of bad business practices and excessive and poorly designed regulation. And, when they're acquired, they are usually acquired by other local or regional operators, not the big national operators.
Second, with respect to flipping:
The second link points to the fact that the banks being offered for sale in it aren’t distressed – they’re profitable going concerns, with more potential buyers than sellers, meaning the buyers will be dangling large amounts of money in front of the current owners.
The first and third links are to professional bank brokers, whose whole business model is built on helping people buy and sell banks. Not big national banking corporations – they don’t need or use these kind of guys. These brokers are catering to private investors. Read what they have to say, it’s illustrative: first, when you buy a bank, you make money two ways:
Irregular (that is to say, infrequent and undependable) dividends; and
Stock appreciation, which they point out is going to be your main source of profit on a bank investment. Stock appreciation is the difference between what you paid for a stock and what you can sell it for; and any investment strategy that contemplates stock appreciation as its main source of profit necessarily assumes from the start that you’ll flip the stock at some point. That is, in fact, the goal of your investment – build up the value of the asset, and with it the stock price, and then try to sell right at the peak.
Both of those brokers are in the business of doing precisely that: helping the old investors flip the bank, and finding new investors who intend to do exactly the same thing at some point down the road. And that is my other point: this buying and selling of small banks is a common practice. The buyers tend to be at least somewhat bigger banks, for the simple reason that if you want to sell it, you have to find a buyer with enough money to buy it; and if you’ve grown the bank since you bought it, your potential buyer will have to be commensurately larger as well.
So if your friendly neighborhood bank goes away, it’s probably gone away for one of two reasons: either a combination of bad lending practices and too much poorly thought-through regulation killed it; or the owners decided to cash in their investment, and sold it to another local or regional operator. In either case, the big banks probably had nothing to do with it.
I never said that big banks like regulations. Of course they don't like regs that are to their detriment. I am well aware of that. That's why they hire lobbyists to water-down the regs that benefit people, and force them to act in a more fudiciary way. There are some regs though that I would imagine help the banks stifle competition just by the sheer quanity, and expense of implementing them. Remember these banks have been in the driver's seat for a long time, and have custom laws set up for their benefit, not ours. And that is why i said that it might be easier to attach ourselves (OWS) to an already existing regional bank that had similar goals as we do.
The regs discourage new entrants in the field, but that's an unintended consequence. The volume and complexity of federal and state regulation and the cost of compliance discourages newcomers in virtually any business, so I guess you could say that in a sense all existing businesses get the same benefit.
I do agree with you that affiliating with an existing bank or credit union is far more realistic than starting one. Folks here are getting a bit over-enthusiastic and forgetting about the fact that if you're going to get into a business handling hundreds of millions of dollars in complex financial transactions, you need some people with a whole lot of experience doing it, and quite a bit of infrastructure with which to do it. Affiliating with someone that already knows what they are doing and is already up and running is a much simpler route with a much greater likelihood of success.
I agree with everything you said except the regs discourging new entrants, and/or existing ones in the field being an "unintended consequence." Rules and regs are written for corp farmers to the detriment of independent farmers, and i would bet that is true for the banking world, and a whole lot of other businesses as well.
Sometimes it's true that regulations are written for existing businesses with the specific intent of making it difficult for new entrants. A lot of stupid licensing requirements fall into this category, like education and testing requirements for flower arrangers and things of that sort. But when it comes to things like major financial regulation that's not true in my experience. The big banks each spend hundreds of millions of dollars a year on compliance, and have banks of lawyers and accountants working on it, and even when they're really trying they still screw it up all the time and pay many millions of dollars in penalties every year to federal agencies as a result. Nobody I've ever met in the banking business wants to spend that money; and the only way it would really help them competitively would be if it screwed one of the other big players, or kept some major foreign bank from doing business in the US. Those outcomes they would like and would be willing to pay for -- but keeping some little local bank or credit union out of the business just isn't worth bothering with.
Yes in my career in the marine petroleum transportation business I saw this same dynamic take place. While some of the regulations were good in promoting safety, many other regs were just bullshit.
Yup. You've got guys in Washington sitting in an office on the Mall who have never been on an oil rig or a ship or even to a port or marine terminal sitting there writing regulations on how to run these things, and don't-give-a-shit bureaucrats out there enforcing them, and sometimes the results are not pretty. And because the guys doing the writing are usually lawyers, there's a big emphasis on lots and lots of paperwork , and not so much thought about whether that paperwork is actually accomplishing anything. They tend to figure that the paperwork is itself some sort of solution, regardless of what it accomplishes or how much of your time is wasted filling it out.
Companies also have to hire bureaucrats (from the CG in my case) who are barely able to pick themselves up from their chairs,to decipher all the crap, that comes from Washington. Empolyees are forced to fill out a plehthora of check-lists taking time away from true safe practices. And no one is asking for any input from those people who were out in the field running safe operations for years. Gee I sound a litle uncharacteristically bitter, don't I? lol Despite all this I did enjoy my job for the most part.
I could not agree with you more. It's mind-boggling sometimes how completely useless some of that crap is, and how completely useless some of those people are. It makes you want to bang your head on the wall.
Yes, it was the 'bulkhead' for me.
Thank you for sharing this.
You're welcome.
I already use a credit union in sf but it looks like I'll be switching.
Cool. The journey begins with the first step.
This is the way to go.
Yes I think that this the "way to go" too. As our movement grows, I think the regional banks may indeed come calling as they will see the advantages to alligning themselves with OWS, and the principles that we hold dear. Already in some of our major universities there is a rebellion on the current way that economics are taught. This is very promising as it puts more pressure on the corrupt status quo. Unfortunately I do not have a link for you at this time, but i am sure you can google it.
When it becomes successful, and it will, will OWS stay true to it's cause? It could become a threat to the status quo just by being efficient.
I am going to leave this here, it is pretty relevant. Basically you can make a bank that does not create national currency (or a competing currency). Like a Time Bank, or a private issuance of a different type of money, such as the Terra Trade Reference Currency (which was designed to be legal within this system). Heck you could set up a local learning bank, probably funded by donations, but you can get more out of those donations by using a currency of your own issuance that is designed to help realize your organization's goals.
http://www.scribd.com/doc/93313960/Bernard-Lietaer-New-Money-For-A-New-World-full-pdf-ebook
The trick here is getting people to accept the private money as payment for things. A few localities in the US have done it; and a company in Canada called Canadian Tire has been doing it for many years, with great success -- businesses in many places take Canadian Tire money at par value, and when they announced earlier this year that they were planning to discontinue its issuance, there was a bit of an uproar because people like it so much.
Note however, that others have tried and failed. Somehow, you need to get a critical mass of people and businesses to buy in otherwise it dies.
But the neat thing is there is many levels of critical mass. Hitting critical mass in your neighborhood for a Time Dollars program, and hitting critical Mass in NYC with a Commercial Credit System will vary tremendously in difficulty.
Quite so, and most of the successful ones have indeed been in small venues where you could get most everybody to participate. On that level, it's pretty do-able. And over time, maybe on a larger scale too. Canadian Tire money is taken over a pretty broad geographic area.
In a totally slumped economy however, the adoption rate can be astounding, examples in Austria with the Wara, and Germany with the Worgl demonstrate this. They also however demonstrate the fear that the powers that be have of such currencies, the rise of the Nazi Party after the systematic ban on the Worgl comes to mind.
Also, more on educational currency, from the plan that Brazil implemented.
http://www.complementarycurrency.org/ccLibrary/brazil_education_currency_system_Lietaer.pdf
Why not find a credit union composed of members who are most in line with OWS sentiments and support membership in that credit union or form an OWS credit union with OWS individuals who have credit union administrative experience?
could u explane the difference between a credit union and a bank
Both are banks but a credit union is member owned. A bank is privately owned.
There is nothing stopping us printing up our own money, and using it as an exchange media for simple bartering of produce and labour exchange.
This is happening already in Greece, where austerity measures imposed by their gov has pretty much forced people to think, again.
We have barter/exchange systems in place in Australia, and the internet is a great way to start these things happening in a local system for starters.
Think globally, by acting locally. It only happens, if you make it happen.
The only form of currency I would accept is one with a fixed amount of 24K gold ribbon running through it.
Does that ribbon equate to the true value of the script?
It would be by weight not value.
Gold value goes up and down.
US greenbacks are paper with a face value based on trust.
Our own trade notes would be no more or less based on personal trust.
Currency always has the threat of counterfeiting. The supply of gold varies by just one percent a year so counterfeiting and inflation theoretically are eliminated.
What will your currency have as a value? A dollar is a dimensionless value. What would you index it to?
The currency will be based on the erg, meaning human effort.
The general public assembly will hear the case for rises and falls in the value of ergs, in relation to each and every sector of industry, and those of us who outlay time and ergs to upgrade our earning capacity, for example, health workers, scientists, researchers, can expect to realise a greater number of ergs, per hour of effort.
Any rorting of this erg-based currency will soon attract attention, and be addressed at each monthly general assembly in each region.
Maybe the Erg is a pretty accurate name and description for the new currency? Just a suggestion.
Gold price in US $ has risen 600 in less than ten years, so where you get the one percent rise thing from is beyond the pale. However, I will humour you, for the sake of argument.
http://www.higbank.com/index.php?option=com_content&view=article&id=106&Itemid=104&lang=en
The physical supply of gold only increases about one or two percent per year.
Wouldn't the most persuasive members have an unfair advantage in their sectors receiving a higher rate than would be justified?
Gold has all the properties of lead.
The most persuasive members of any society already have an an unspoken advantage receiving a higher rate of ergs, right? You expect to pay a doctor/lawyer/solicitor/medical specialist more for their time, right?
Gold has many properties that lead does not. Rarity is the most important when used as a medium of exchange. Because it takes a great deal of labor to extract it, that real labor in effect is contained in that gold in a tiny package that does not rust, tear, or degrade and can be exchanged for the other real labor contained in any other products that you might want to purchase.
You would have to name the properties that gold has that lead doesn't.
Besides, we are discussing the Erg, remember? The new currency that is for the people, by the people, and of the people?
What is needed is a medium of exchange that can outwit dishonest people.
So you're talking about counterfeiting? You are aware that the greenback is the most counterfeited paper in the known world?
The Erg will be highly glazed porcelain, like the old Chinese coins. Twelve grains of fine metalic fragments will be within the clay of the coins. There will only be one coin, and fabrication (counterfeiting) of this coin will be counterproductive (unprofitable) in a large scale, due to the availability of the metalic fragments. (hmmm, I've got some ideas here, that are best kept exclusively for now)
Money is a representation of resources. I have a tomato farm producing 10,000 tomatoes a day. That's where money is made from nothing. My new tomatoes = new money in the system. The worth of the money in the country must reflect this. The problem is that there are many unexpected accidents, corruption, etc... Perhaps next year there will be a storm and I'll only make 1,000 tomatoes, etc...
The future of evaluating the worth of a particular currency and to know how much new money should be pumped into the country is to base ourselves on computer modeling. Just like the last short story in Asimov's I Robot, there will come a time when a computer program will be fed al the production data of a country and to a realtime analysis of the worth of the money. This is much more powerful than the predictions of bankers, predictions which are prone to many more errors.
So many of the decisions we make today like how many crabs we catch, how many new houses we build, etc... will one day be made by computer programs with much more efficiency than humans.
Imagine if all transactions were automatically fed into a computer system. Every one. Corruption would be near impossible and inflation could be correctly calculated at every turn.
Of course, the problem with such a system is that to make the data available we enter into problems of privacy. A company would have to provide the computer with how many products were created, how many accidents, unexpected results, etc... If all transactions are accounted for, then everyone's finances will be entered in a database somewhere in the most minute details.
Unless we do something like this, there will always be corruption and problematic speculation. The problem today is not so much capitalism, but the fact that those making speculations don't have the necessary data to do so adequately.
I disagree whole-heartedly. Speculation within capitalism is purely gambling. Call it derivatives, you can call it anything you like, but when it comes down to the crunch, it's basically gambling on "futures" which is a non-gambling way of describing "odds" on "maybes", or stargazing for the masses.
Your vision of a computer-based estimating program sounds much like the novels and novellas you mention in your vision; pure fiction.
These "programs" like you admit, would rely upon input from humans. Accurate information. Now take a look at what happened in the global financial crisis (meltdown through mega-bullshitting), and you'll see why I don't think even the best mega-puter could sift through the bullshit likely to be fed to it by greedy wannabe capitalist arseholes.
Sorry, ol' mate.
Try again.
The problem with current estimates is that the data is not reliable. With enough data, predictions become way more reliable and efficient. You have to make predictions so it's better to do it with as much data as possible. Big bankers failed because they lack data on the small scale.
We know a lot about the macro economy, it's when we go in the meso and micro that we lose control. We make estimates all the time for the big stuff and small stuff. For example, if you want to open a restaurant you'll make a prediction that such and such street is a good bet, then you'll make a prediction that such and such cuisine is a good bet. But, you're mostly judging from instinct. If you had very precise data you could make a much much better prediction. For example, let's say you decide to open a spaghetti restaurant at a certain location. With all the data in a computer system, the computer could tell you that the last two spaghetti restaurants that opened saw a drop in sale, and that the trend has been going on for two years. It might then suggest another area where spaghetti restaurants are few and predicted to do well. Actually, if the computer had enough data it could tell you where in the US would be the best place for your restaurant. In such a system, people don't mess up so much. How many people borrowed large sums of money to try some business venture only to see if fail because their predictions were bad. Many. These people then become a strain on the system as they struggle to pay of their debts instead of being in business hiring people.
In fact, it's not fiction, it's already starting to happen in certain sectors.
You will always have speculation. You can't get away from it. Every time a business opens it speculates it will have a clientele. Every time you borrow money you speculate on how long it might take you to pay it back. Etc... We can't escape speculation because we don't know the future. It's normal. What we can do is use as much data as possible to make adequate predictions with a small margin of error. Like the weather does. The further you go in the future, the worst the weather estimate is, but for the next few days, it's pretty good. If you had a system like this for the economy that was rolling in real time, you would be able to predict a lot! Now we only know what the big transactions are and that's what more economists base their analysis on, but if we had details of every transaction up to the smallest one, then the analysis would be so much better.
Sure it's happening in certain sectors. No doubt.
In the financial sector, we still have major gamblers playing high stakes, and doing their level best to try and trick the system.
You cannot rely upon this kind of gambler to input reliable data. Simple as that.
Take this small example concerning unemployment. Now, we here a lot about the problems of unemployment and how new jobs need to be created, etc... However, one of the big problems in finding a job is now always their availability, but actually knowing that the job is open. A computer program that follows trends to a T would know that in 4 years so many welders will be needed with a margin error of 2%. I'm starting college and I see this! Ah, perfect. Plus the college only trains as much as the computer predicts will be needed. So, I most likely will have a job. Now, when I start searching ,the computer systems know where all the welding jobs are across the country, and when one opens up, I instantly know about it. That saves me a month of welfare because I found the job fast. It saves taxpayers money too. The system is tight.
Now that, I can agree with. Run with it.
It has profit written all over it.
The gamblers would not input the data. The data would be inputed automatically. Every time a transaction is made data would be inputed in the system. You couldn't cheat it. When you use your ATM to buy a 15$ chair, the system would know. It would be able to predict how many chairs will be needed next year by analyzing trends. If a school throws out 200 computers, but 400 miles away some poor people needed computers, the system would know. It would track resources as well as money transactions.
If you use your iphone today you can locate the nearest hardware store from your house. This saves you time and gas. In the future, you'll not only be able to locate stores, but you'll be able to locate exact products. Where's the closest place that has 1/8 screws in stock right now. The computer knows because all items are tracked. Your neighbor has an old extra hammer, you need a hammer, you could know from the system instead of buying a new one. Resources will be managed much more efficiently helping our environment.
This is how cars should work. Nobody owns cars. They are owned by the government and paid for by taxes. A computer program knows exactly how many cars are needed. Look outside, there are thousands of parked cars not being used. That is waste and clutter. When you need a car, you use an iphone or similar device to call it. It drives itself to your house. You use it for however long, then when you are done you leave it wherever you want. It can drive itself back to wherever it wants. If the car is broken, it calls another one for you, then either drives itself to be repaired, or, if it can't, calls the headquarters to pick it up. Everyone has access to cars.
This might sound like giving up a lot or privacy, but the banks already know all your steps because of ATM, phone companies know each of your steps because of mobiles, Internet companies know what you browse, etc.. We have already shown that we are ready to give up privacy if it means a better system.
Your concept relies upon too many variables.
Waaaaaaay too many variables.
Your neighbour has a hammer, and you need one? Just go and knock on his/her door ffs.
Your car breaks down, so it drives itself to the workshop? How about it drops you off on the way? Hmmm?
The latter part of your post delves deeply into mass socialism, which the people of the US of A are completely against.
On the privacy issue, your cell phone is gsm compliant, which means it can be used to track your position, and be used as a listening device.
The old analogue service is now in the hands of the military, police and secret service.
Ya, we have the push bike thing too and it's working pretty good.
It doesn't rely on too many variables. With good models, stuff can be predicted. Thing is all our economy is based on predictions everyday, but we have very little data. We already rely models, but because we have little data, they are very crude. I don't think the system is too bad, I just think we take too many risks without understand their outcome. The scientific method in tandem with strong analytical engines and a lot of data could do wonders. And, they will. It's only a matter of time.
This is what you can expect for the next 20 years. More and more precision in everything, advertising, economy, starting businesses, finding jobs, etc...
The car thing I talked about is inevitable. It makes no sense that there are thousands upon thousands of cars parked at any one time in a city. It's a huge waste. There are already cities which have started implementing a system like I talk about, albeit by co-op companies and not by the government. Montreal has this type of co-op car. You pay a certain amount of money each year, then you can use these cars whenever you need. They are spread around the city in various parking lots. You just take it and bring it back to one of those parking lots when you are done. You can reserve them a few days in advance, or just go to a parking and see if there's one available.
The car thing, I would back three hundred percent.
Absolutely, my friend. Brilliant concept, that our council in Brisbane is trialling with pushbikes.
and not just any bank.... not the usual bank that the FED controls....
We need at least state owned banks, or better yet
a "Social Reserve Bank"
whats that
Why? Banking is governed by strict regulations for the participants as far as interest rates and loans are concerned. You won't be allowed to give out zero percent loans, or bypass credit standards.... especially an OWS bank that would be under the spotlight..... those days are over.
I don't think there's any law preventing you from making interest-free loans or bad-credit-risk loans (massive paperwork and regulatory compliance issues notwithstanding) as Long as you aren't using federally guaranteed money. The real questions are, how do you stay afloat and in business if you make no profit from interest or fees, and how you recover your losses when some of your loans default, as some percentage of them (and the higher the credit risk of your customers the higher the default percentage will be) do inevitably default? And how will you pay interest on deposits if you don't charge interest on loans? Remember, it's not your money you'd be loaning out, it's the savings of some fellow OWS sort that have been entrusted to you.
I was thinking of a bank large enough to be part of the FDIC, to not be insured would be too large of a risk. Otherwise you are correct. There would have to be enough interest to cover overhead. It would have to operate like a non-profit organization. The terms of the loans could be a great deal looser as far as the loan default rules in place now.
Still is a bad idea.
any possible positives,geo
None.
or any other prospects for moving into real economic endeavours
You're making me laugh, just spit out my coffee. Could you be more obvious?
1) put aside your intellectual desire to do this
2) join an existing credit union
3) use your OWS power to do something REAL
4) get rid of citizens united & corporate personhood
3 things of which you guys have none
This can be done and it's exactly what OWS should be doing. One of my parents made a very modest investment in a bank that someone they knew started and it took off. That's the problem- it got swallowed up because it was so successful. Instead of trying to bring back Glass-Steagall why not fill the gap that was eliminated when it was repealed? You have to have core values to make it work.
Extremely good idea!
You just have to make it tough for corrupt and greedy bastards to have any say or control in it.
What do we need to start it rolling? under OWS.
The "OCCUPY WALL STREET BANK". It doesn't exactly have a catchy name.
LOL
No "OCCUPY WALL STREET BANK" is not a "catchy name," but considering how many Americans 'Bank of America' has screwed, I would rather go with a bank that has a more altruistic mission statement
We could change the world, by lending for the kind of projects we want
Whats this we? Got a mouse in your pocket?
If merely funding projects is your goal, why not look into crowdfunding?
whats that, everybody chips in
There's a post on it at this forum called Cooperatives & crowd funding http://occupywallst.org/forum/cooperatives-crowd-funding/ but it would be better for you to look it up online to get a variety of informative sources on it.
That is the beauty of America, you can start a business that promotes the beliefs you want to put forward. I hope the bank you create does well and I hope I will want to be a customer and take advantage of the products that compete against the products offered by the standard banking system as it is today. Best of luck to you.
Deluxe Toy Cash Register Set
You are probably right. The children in OWS don't have the maturity to accomplish real significant change with their ideas. They are not up to being competitive in the real world.
This a great idea. I suggest making mortgages. Then when people default, you can tell them to "occupy" and just give them the house for free. Similarly, you can make student loans. When the kid studies something no employer gives a damn about, racks up $80k in debt, and defaults, you can just write it off. Finally, fairness in banking. LOL
Good plan, lets nationalize all the banks instead. I'm with you. Therefore the government can cover the defaults like they only do for the big players. Let the nationalized banks do the fair lending.
OK, while your doing that, can u still advise us? How about state owned
Not unheard of in the US. In 1983 President Reagan fully nationalized the Continental Illinois Bank among others during our Bank Bailouts 1.0 (the S&L scandal)
We own 85% of AIG and quite few more companies including GM and bank stocks.
So why go through the pretense that this is a bad idea, when the defender of Free Enterprise and capitalism Ronny Raygunz has done it.
Nationalize all the SOB's for screwing over the economy, not just ours but the global economy with their house of cards. They can't be trusted. Fair lending that is non-usury can then commence.
Oh Ok you're serious i thought u were kidding. Given whos running the federal gov, would that be an improvement. Yes, of coarse, it could be, but u really think thats what we should advocate
Almost anything would be an improvement over the system we currently have. There has been no real financial reform. The house of cards remains, we are still vulnerable to systemic risk. If we are not going to reform the system, might as well nationalize it.
if the occupy movement demanded that , would we be dead in the water publicity wise
Right only Ronald Reagan could pull that off....
did the bank he nationalized, stay nationalized
No, if I remember right it stayed that way for several years.
how about state or mabey even city and town owned banks.
even if not in reality, just for publicity or a kind of platform, a way to educate ourselves and the public on how this all works
See clause #9 of the Free Democracy Amendment http://occupywallst.org/forum/free-democracy-amendment/.
Non-profit Credit unions. A good kind of union.
Sure, because political lending will be a blast until all the banks are broke. Occutards should open their own bank. They could even have a reality show about it on Comedy Central.
sniff...sniff I smell something..... Oh.. you posted again.
That's almost as well thought out as your last one. An OWS bank reality show would be hilarious. A bank where default is simply proof of the bank's badness and justification for keeping what you bought with the money. It'd be great.
A point has been reached where the total debt is being demanded to be wiped, mainly because the banks have not budged to renegotiate terms. If you don't start paying back the loan within a short period of graduation, bang you are in default, whether the job market is good or bad.... its all or nothing. That is not smart business.
The same applies to the mortgage market. The banks would rather have an empty house then reduced payments, even though the housing market is down and they can't sell it, and the house will need maintenance. There investment is deteriorating. This isn't smart either
An OWS bank would be great entertainment. Maybe the sign carriers could be on the board with their extensive knowledge of things. LOL
I'm sure it would. It would be the wrong thing to do which is why I'm against it. But we really are not here for your entertainment.
Your knowledge base just puts me in awe.... quick where are my sunglasses I am being blinded by the light of the enlightened. How were you doing in the 2000's? Was the feeding frenzy fun?
But yet you are entertaining. Please, do the bank. Show us how it's done. "Occupy" a bank, one of your own this time. LOL
Occupying a bank doesn't work unless we are crashing the board meeting of BoA or Citigroup. Running a bank is not what we should be doing. But the government owning the banks and running them would be pretty good start.
You are actually pretty entertaining.. until I get bored.
Oh, you want to take someone else's bank. Now I understand an OWS bank. LOL
Hasn't the government already done that? Reagan in 1983 ring a bell? He must be an OWS advocate as well then.
No.
Get some of your little friends together and run a bank according to the idiot signs at OWS protests. Watch it fail... fast.
OWS types are great at what they'd do with someone else's business or bank, they just never seem to get around to anything themselves.
No? The Continental Illinois National Bank and Trust Company was at one time the seventh-largest bank in the United States, nationalized by Pres Reagan in 1983.
Until you learn your facts fuck you and your lectures.
But not then run by OWS-type ideas. You were saying?
OWS is not for money, we believe that money has become the driving force behind all policy making. We have to stop the force.
You underestimate many of the people carrying those signs in our protests, and the people who support the Occupy movement. There are some very well educated people who have graduated from some of the best schools in the country with degrees in ecomics. And yet still others who are profs at these universities, and have backgrounds in Wall St.
No, I really don't. Well educated? More typically mis-educated would describe it better.
How would you know that they were mis-educated. Let me guess: Because it doesn't fit the faux scenario that you have conjured up in your mind, right?
Because of the idiotic message and after seeing the product of our schools I know how common mis-educations have become.
"Idiotic message?" I disagree.
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