Which, for the record, isn't full-reserve (the legal limit is 900% leveraging... i.e., if I deposit $10, the bank can loan $90 off of that). He'd still be loaning out money he doesn't have, and he'd still be able to generate revenue from that.
In the case of full-reserve banking, you can still make money. You may not be able to offer FREE CHECKING and free x x x x blah blah blah, but with the interest accumulated from your loans, a decent amount of working capital, and fees from accounts it's definitely conceivable.
In practice this does not happen. And in any case, no one lends money they don't have, as you put it, unless you have strange ideas about what constitutes money.
And I gathered that he wants to be separate from that system and therefore not take part in fractional reserve banking.
If he were to explain in detail how he would have 2-3x more reserves than the banks and not take part in the fractional reserve banking system, he would clear up some of the confusion.
Assuming the bank is making an (adjusted) return of 2% on your money, the account has to have 10k in it even to break even. Very few current accounts do.
Except that he said this:
SafeBank would maintain a reserve level 2-3x higher than Fed requirements and any other bank.
What he's saying is this. SafeBank would be less risky and could spend a LOT less money. Revenue would be lower, but he's saying that spending at financial institutions is nigh ridiculous and could more than compensate for it.
"And he hasn't satisfied the most important question: how would this be better than a member-owned credit union?"
How is that the more important question? What if it was just as good as a credit union?
How much better is Starbucks? I think 80% of what he's talking about is a marketing opportunity.