"Tech" Startups these days look more and more like convenient customer/innovation acquisition vehicles for inevitable big fish and less like small businesses.
Search keywords for more info on this topic: “FedAccounts”, “Banking for All”
Disclosure: I am actively advocating for this policy with policymakers.
Would FedAccounts be essentially FedWire extended for regular people? It seems like governments don't really share information otherwise we could just lift the tech from Sweden (Swish). It would be an absolute sea change, but I want I want to starve is the finance beast as a whole -- the hedge funds that front-run and sometimes directly exploit pension funds, etc.
I personally think that one of the biggest things someone could do to unwind the current financial system's largess is just ply a bunch of money/expertise/tech at improving credit unions. I maintain an account at a credit union and I absolutely love it, the people that worked there actually seemed happy, plugged in to the local economy and society. It is bonkers to me that anyone still banks at the large institutions (the ones famous for overdraft "protection") with local credit unions being as good as they are (and often very competitive on rates). If the large institutions don't get all the deposit flow, then they can't offer the huge leverage to the firms, HNW individuals, etc -- credit unions aren't going to be out there offering 15x+ leverage to Archegos Capital.
Since what I've written is essentially a wishlist/vapor-policy, let's reinstate Glass-Steagall while we're at it.
My general impression with this movement, is not that it is a way of easing transfers, but rather a nationalisation of bank accounts. The subject crops up frequently in Denmark, where citizens are required to have a bank account, that the government knows about. But only private banks offer bank accounts.[0] So it raises the question; why does the national bank not offer bank accounts?
Then public interest, rather than private, could set rates for fees, costs and interests on these bank accounts. It also follows that in this scenario, it might be worth considering whether private banks should even be able to create money the way they are permitted to now, and only let the national bank 'print' money (both physical and digital).
[0] It should be noted that the law requires private banks to offer these account at no cost to citizens (though just one per citizen).
Well that’s terrifying in general, but the Denmark case you’ve laid out sounds just about perfect.
Denmark has found a way to use it’s capitalism — a “public private partnership“ with a captive audience, but properly regulated so they can’t absolutely fleece customers.
I think it’s fine that private banks create money because in the reverse it kind of distributes power — feels like a good artificial restraint (artificial only in that the government could theoretically just undo it) on the government.
And whenever you ask someone why the hell they use UltraMegaBankOfAbuse, they always cite some far fetched scenario that makes Credit Unions slightly less convenient. “Well, if I ever found myself in the deserts of Morocco, and needed to use an ATM to pay my electric bill, there wouldn’t be a Credit Union branch there, so checkmate! I obviously need to bank with Chase!” It’s like they are looking for any excuse to abuse themselves.
Also one time the credit union let someone sign my account up to pay for their car loan, because the clerk who set up the automatic payments accidentally typed in my account number, which was one off from the car loan holder’s. To their credit, the credit union was quick to resolve the issue, but it left a bad taste in my mouth that it was so easy for them to make that mistake and nothing on the back end to catch it.
Were you just extremely unlucky, or doesn't your bank account number have a proper checksum builtin to prevent this?
Also, in my native Belgium, bank payments have had automated payment processing structured messages attached to almost all {b,c}2b payments. That one contains a similar mod97 check.
[0] https://en.wikipedia.org/wiki/International_Bank_Account_Num...
And if numbers are getting keyed in tens of thousands of times per day across a large business, and mistakes happen hundreds of times a week, a checksum that catches 95% of errors will still let tens of errors go undetected every week.
What annoys me is that these are both problems with technical (mostly) solutions. The big banks don’t have magic humans that don’t make mistakes, they just have better systems that reduce error, and can fund development of better apps.
I personally use only the web client of my bank, and am very happy with it, but will admit that the mobile banking app is less than desirable. Wish they would all just make PWAs and call it a day.
Chase in the other hand, was happy to let me open one.
I may not need money in morroco, but I do in Seattle from time to time, whenever I lose/compromise my credit card
I'm fine with Chase and other national banks existing, but I think a lot of their scale (and corresponding ability to perform misdeeds) is predicated on the fact that people (ex. college students) go there FIRST. The defaults need to change.
Simple did not offer checks (at least pre BBVA acquisition, when I had an account with them), for example.
The Fed is rolling out instant payments in 2023, after which I expect checks to be obsolete and no longer offered by financial institutions.
We are at least a decade away from the time when checks are not used, probably two. For that to happen the baby boomers must be nearly completely gone from the workforce. The reason why we still use checks is because a lot of businesses are still owned and operated by the boomers whose processes are
send out bills => receive checks => mark payments on accounts in folders => deposit a batch of checks into an account.
Those are the lifestyle business whose owners/managers are in the last decade of retiring. They won't be either upgrading or selling them.
Allow only direct transfer of money already in account, do not accept checks?
From stories about fraud - ones that require bad checks are especially unusual to me. Because in Europe checks seem to be basically gone, at least I have never accepted or made one.
In theory bank transfer may be reversed, but I have not heard about popular frauds centered around it, so it is likely harder to achieve.
I can make a bank transfer, but only if I have enough money in my account.
Is it solving the problem, or is having ability to produce checks absolutely necessary in USA and not replaceable by bank transfers for some reason?
AFAIK, the initiating party cannot revert a completed transfer. What can be reversed is a SEPA withdrawal, up to 6(?) weeks after it has completed.
Maybe it requires manual bank action, and cannot be done by sender.
But there is still risk that money appeared in your account and then disappeared.
But vastly lower than with checks.
Do you think these people will then magically disappear?
Or would they instead be forced into more desperate circumstances where it is even harder for them to act in a way which benefits society?
Look, of course we need consequences for bad decisions. However, and more importantly, we also need a path to redemption.
This would be awesome, but it's never going to happen as the fed is the banks' way of controlling the monetary supply. It's their tool, deliberately not beholden to the populace.
I wish you good luck anyway.
It's their beast and they use it to serve themselves. If other people happen to be able to eat as a result, they're okay with that.
>Having the post office offer banking services (for example) has nothing to do with "the Fed"'s ability to enact monetary policy.
Banks literally create money and loan it out at interest. The fed providing accounts allowing that would directly compete with their business. It's a conflict of interest to serve the public in any way that a bank does, and since they control the fed, they'll use it to block such things.
It's just basic self interest.
It seems like it would be a distraction (though also perhaps a useful tool) in the monetary policy front.
https://billhunt.dev/blog/2020/12/18/federal-policy-recs/#4-...
https://gcn.com/articles/2013/01/28/usps-pilot-cloud-federal...
That said, they’re currently struggling to even deliver packages or letters under the new leadership (around the time of the election I had multiple mailed checks go missing permanently, and a letter take a month+ to go within the state where it’s usually 3 days max), so maybe putting our hopes on them to save the economy through a massive new program is not a good idea?
Despite the US population practically doubling, the amount of mail sent is back down to ~1976 levels.
This isn't artificial.
The difference in quality of service pre-dejoy and post was pretty clear? And they’ve been break even or profitable pretty much every year.
I’d consider that artificially hamstrung, since it isn’t the market doing that.
Definitely not unsolvable - pointing out that if you want the USPS to be a happy, well run organization that can take on a massive expansion in scope, it would take awhile and have to fight against the current inertia. It isn’t a slam dunk right now.
The British government owns two notable banks, the Bank of England of course (but for less than a century) and the National Savings & Investment Bank ("NS&I").
The Bank of England doesn't have retail services, once upon a time it offered some products like mortgages to permanent staff but this ceased because it is in a real sense self-dealing, and it's hard to explain to a foreign central bank why their $100M unsecured loan to the bank's Chief Executive, who is coincidentally also brother of the leader of their country is a scandal when the Bank of England is loaning the price of a mid-size home counties house to some mid-ranking employee. I mean, these are different things, but they aren't different enough to make the point, so that programme ended.
NS&I however offers numerous popular retail services for ordinary savers in the UK. It has some conventional savings accounts (obviously paying rather little interest these days), term bonds, some specialist UK products like ISAs, but it also has the "premium bond" which is effectively a not very good savings bond except instead of interest you win "prizes" from the pool of money that would have accrued as interest to all savers. The idea being this is exciting like gambling, but you can't lose (except in the sense that on average you'd make more money with a conventional bond of course).
These are very different activities, they possibly reward different management styles, certainly they would share few resources if they were a single entity.
The idea of using the US Post Office instead is good, because the Post Office already has actual branches all over the country, but it would need to staff up considerably to do this work, so having a separate government entity responsible for the actual bank, with the Post Office handling the front-end experience seems like a sound idea.
When doing some searches I randomly ran across [http://www.campaignforpostalbanking.org/know-the-facts/] which seems to be strongly advocating for it.
It’s not just loose fiscal policy, it’s also technology’s role in reducing marginal costs. It’s basically impossible for a smaller player to compete in commodity markets like consumer banking because the bigger player has lower marginal costs and can offer a more attractive price.
The same as Walmart/Target/Home Depot/Lowes/Best Buy dominating retail.
https://en.m.wikipedia.org/wiki/Attempted_purchase_of_T-Mobi...
However, TMobile went on to purchase Sprint, so...
While certainly a privilege, I empathize with founders who reach their “exit” dream, yet remain in a moral conundrum over whether what they just did actually benefits anyone but themselves.
Concentration is somewhat inevitable, sadly.
BTW Simple was not a real bank per se, most of the back office and core IT services (which amount to 80pc of non-branches cost) was provided by BBVA Compass (meaning BBVA had already consolidated IT and Ops in the US 5 y ago, to reduce capital contraints.
(BBVA bought Compass in 2007, Simple in 2014, and folded the Compass brand in 2019.)
> [Simple] was purchased by BBVA in 2014. > BBVA said in January that it would be shutting down Simple later in 2021. The decision came from the company “reassessing its goals” as part of a planned sale to PNC Bank, which reached an agreement to acquire BBVA’s US operations in November 2020.
The consolidation problem seems to be getting worse everywhere. [1]. Gotta imagine they're connected.
[2] https://concentrationcrisis.openmarketsinstitute.org/