Non Profit Bank - A Solution to Our Economic Problems
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Are you tired of banks and financial institutions being the root cause for all major economic crisis? Are you tired of seeing those same financial institutions being rewarded for making bad choices and risky investments in derivative and credit default swap contracts by being bailed out? And then turning around and practicing those same bad habits that got us in this financial mess? Well, I have a solution! Open an account today with a non profit bank! We have a 100% deposit fractional reserve system, so you can be assured that we have your money when you need it! Due to that same 100% reserve system, we will never need to be bailed out with your taxpayer money! Need a loan for expanding your business or to remodel your house?Apply today and get a decision within minutes!
Our current banking system (roughly described above)
The Problem: I'd like to think I'm pretty knowledgeable about banks, financial markets, and the bank is not your friend. Its their job to make sure that you bury yourself in debt, they'll even help you bury yourself in debt, by extending lines of credit, even letting you borrow against your house! Okay, now theres something that really irks me, an equity line of credit. When people take an equity line, their borrowing money they already have in their house, but the bank knows that its in non liquidity form, so what do they do? They require you to borrow your own money! and then if you default, etc, the bank takes your house! And poof there goes your wealth and your left standing holding the bag while the bank profits, and sells it off to someone else. This is just the tip of the ice berg of banks, like did you know that for every $100 deposited into your account, a bank can create a $1,000? Yes, its called "Fractional Reserve Banking" and is practiced by all modern banks (except for banks under Islamic Law) There is a certain reserve requirement that banks have to have in their vaults/balance sheet, that reserve requirement is established by the central bank/government. So say I deposit $500 into my account, well with a 10% reserve requirement, that can potential create $5,000 for the bank. How the bank creates that money, is that it loans out the $450 to a business or consumer,(keeping the $50 in case you withdraw some money, on reserve =10%) that $450 loan has a interest rate. It is through that interest rate that the bank creates the extra money from that deposit therefore increasing inflation. Why this type of banking practice isn't practiced by banks under Islamic Law is that they don't believe in interest rates. Now, since the bank is only required to keep 10% of its depositors cash, what happens if everyone went to go withdraw their money from the bank? First, thats what caused the Great Depression. Two, thats why we now have the FDIC, thats the government solution to this system. So, say everyone withdraws their money from a bank, well you can see that the bank would have a serious problem, no? due to the fractional reserve system it uses, its called a "Bank Run" Well, what happens is that the bank is then forced to borrow from the Central Bank, another bank, or recall the loans it made. Well, its easier for the banks to borrow from the central bank or another bank then to recall its loans. It is this very system: Fractional Reserve, along with some other practices that caused the Great Depression I believe, and the same economic crisis we are in. Its the only constant! Sure, because of the FDIC and a more lax Central Bank monetary policy now, this recession hasn't been as bad as it could be, but I wished that everyone understood government is never the solution, its the PROBLEM!!! Because if the government required the banks to keep 100% of their depositors money, things would be totally different! Nor would our tax money go to bailing out these banks due to their bad investment decisions.
My Solution: I think its the profit driven mentality of wall street that has created our economic crisis. Even though it would be a non-profit organization, there are still Non-Profit organization CEO's/Presidents making over $250,000 a year, a well as paid employees! Granted a CEO of a non profit organization shouldn't expect to be a millionaire or extremely wealthy, but they can have some other side job to compensate for the lack of 'compensation/bonuses'. Alright, so now your wondering how does this work, well here is the basics: A Non-Profit Bank would need to borrow money from the Federal Reserve (due its 100% reserve fractional system), ideally at a low interest rate (like right now). yes, I am aware that banks can loan from the Federal Reserve with the current system, but they are not required to keep 100% of their depositors money.The bank then would loan that money out at a higher interest rate(which they do right now). The bank would receive deposits from their customers, each new customer and existing customer would receive a line of credit, this line of credit would replace the overdraft charges(I HATE THOSE!). The line of credit would have a limit($300), and have a interest rate. This line of credit would not be dependent on a persons credit score, it would be a standardized thing. Now, if a person or business needed a loan, they would apply like they normally would at any other bank, and then the non-profit bank would determine if they are eligible to receive that loan,etc. The non profit bank would be inclined to only approve credit worthy people cause the bank would be on the hook for the loan. So no more of this subprime loan crap!How the online part would work is that most banks already have a area for customers to check their accounts, etc. A customer can order a new debit card, create an account, sign up for a credit card, and if they need to make a deposit, they would just have their paycheck direct deposited, wire transferred, or mailed to the bank's corporate headquarters. They could pay their credit card or credit line online. Not only do I believe that this will provide financial stability to our system, but help the economy grow over a long period of time by eliminating bad banking practices of financial institutions. It would help restore consumer confidence that their bank is not going to need a bailout in the future or making risky investments with their money cause they profit driven like our current financial banking system.
Critical Factors to make this succeed:
A contract with the Federal Reserve for low interest rate loans, a corporate headquarters, a secure and reliable online website. A online bank not only lowers the start up cost, but one benefit that could exist for a non-profit bank is if a consumer or business defaults on their loan(s), the bank can write it off as a loss and receive a tax credit for the amount of the loan that was written off. With the non-profit bank borrowing money from the central bank, the government can even profit from this! and use that profit to loan out more money to banks, or give it to the treasury for use in the budget. Hmm, maybe the budget can be balanced out and our debt paid off. Also, this system would temper inflation rates due to less money being created by banks and their interest rates.
How you as a consumer can help:
Email, write, phone, twitter your US Senators/Representatives and demand that they pass legislation requiring all banks to be Non-Profit as part of a financial system overhaul regulation (that they keep promising to do, but haven't!) If a Non-Profit bank does exist, speak with your actions by closing out your accounts with a for profit bank and opening new accounts with a non profit bank, forcing the for profit banks to change their bad behavior and adopt more ethical business practices that won't create a similar economic crisis like the one we just experienced.
A Non Profit Bank
- Montana Community Development Corporation
Montana Community Development Corporation Missoula Montana
Do you think my solution is feasible?
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Thanks, this was kind of a rant about the practices of wall street and the banking system. There are some non profit banks in existence such as this bank:
I work for the banking industry. The other day, I had an inspiration. Open a non-profit bank! I see others are already there, which is great. Non-profit doesnt mean the bank won't make moneyof course. The profit could go directly to good works.
I would do business with a non-profit bank, if I could find one. I checked out Hancock Bank.
Sorry, but Hancock Bank is not a non-profit bank. It does serve non-profit organizations as customers and it has an excellent reputation and long track record of stability, but it is listed on Nasdaq as HBHC and had 2nd Qtr earnings posted for 2010.
From their website: "Hancock Holding Company Announces Earnings for Second Quarter 2010. Company Release - 07/20/2010 16:10. GULFPORT, Miss., July 20, 2010 (GLOBE NEWSWIRE) -- Hancock Holding Company (Nasdaq: HBHC) — "the Company" — today announced net income for the quarter ended June 30, 2010. Hancock's second quarter 2010 net income was $6.5 million, and diluted earnings per share were $0.17. On a year-to-date basis, Hancock earned $20.3 million, with diluted earnings per share of $0.55."
I would do business with a non profit bank as well. I didn't do much research on Hancock, I just saw non profit and assumed they were a non profit bank.
Dude, I have been thinking this idea and now that I read your post I really think it can work and make the world better! I'm from Brazil and if there is anything I can do to help contact me on my website.
I am a SVP (23 years in banking) with a bank in a major metropolitan city and would love to start a non-profit bank - for numerous reasons. If anyone is interested in discussing this with the intent of starting one please send me an email - adaptivedesigns@usfamily.net.
Why hasn't this already been attempted? Dave, I'm attempting to assemble a team of professionals to develop a business plan. I have experience with land development, engineering, real estate, and construction. I also know a few highly skilled attorneys. I attempted emailing you, but have not recieved a response as of 12/10/10.
I've had the same idea, but I'd want to take it one step further. Cap salaries of ALL employees based on the average cost of living where ever they live, plus grant everyone part ownership. The excess revenue generated could be put into starting other similar financial institutions around the world, generate funds for other self-funded non-profit organizations, or create funds for economic development in developing countries.
I'd really love to discuss this idea further if anyone is interested. How do we start a bank?
I contacted Dave about two weeks ago and I've yet to get a reply as well. I would love to do this, but my problem is I don't know to start up a bank. I've got experience running a business and raising equity but not running a bank. I am glad that other people are interested in this besides just me!
I've been doing some research. It takes $6-$10 million to get FDIC approval depending on the state. A true non-profit is impossible because they are not allowed to charge interest. I am of the school of thought that this bank should be run exactly like a for profit bank with a legal agreement in place that says the investors are only entitled to reimbursement of their original capital contribution. All profits would be dispursed to charity, community improvement, education, ect based on the recommendations of a committee. This is essentially a hybrid of capitolism and socialism. Pay structure needs to be competitive in this bank to attract qualified people. Growth and market domination will bring much greater profits in the long run. The hardest part is raising capitol without going public. Obviously lots of things to consider.
Whew, $6-$10 million that is a fair amount of change. A true non profit is possible, a model to run a bank without charging interest already exist. I can email you more details if you'd like or email me: alexjbrandtjr@gmail.com
Brilliant idea. The UK has a non profit bank which started in 2002. http://www.charitybank.org/
Mat offer you some inspiration. I think this is definitely the way to go.
I had a similar idea when thinking about returning to using real money such as gold and silver.
The "Bank" would be a non-profit like stated earlier but one of the things people are concerned with returning to the gold standard is the lack of flexibility of gold and silver. After all there is only so much of it. So you credit would be harder to come by and loans would be harder to come by sine you can't just create a contract and loan someone some "money".
What to do...
Make banks (speaking of going back to using gold and silver) act more like a storage vault. It would charge you to hold your money and keep it secure.
Where you could make money by saving/investing is this...
This bank could have something like a Certificate of Deposit to give you interest BUT with the understanding that when you gave them this money it was to be used for loans.
So John Doe walks in gets a loan for $10,000 (your $10,000 that you just put in the CD) and they charge him 8% on the loan for 6 months (let's say you opened a 6 month CD).
The Bank would get 1-2% of the interest collected to pay for employee salaries, supplies, utilities etc. You as the saver/investor would get your principle back with the compounded 6 month interest that John Doe paid each month.
This way those who just want a safe place to save their money (call it a typical savings...just doesn't earn interest) will be assured their money will always be there. No keeping that money as 10% reserve and loaning out the rest to make money. Its there 100% of the time.
The only money that can be loaned out is with these special CD's or for lack of a better term "Mutual Funds" where the saver/investor knows that the bank is using their money to loan out but in return they (the saver/investor) are getting the majority of the interest back at the agreed time frame.
A "Mutual Fund" might be where Jane Doe doesn't have $10,000 to put in the bank to loan out to be able to make money like John Doe. Because we are back to gold and silver a savings account is more like a secured vault so she won't earn money that way as she'll only have it safeguarded for a fee. So what the "bank" could then do is create these "mutual funds" in which several people like Jane Doe is able to pool their money together to allow the bank to use their money to loan out.
So in the case, Jane, Ginger, Jack, and Greg all have $5,000 to put in this fund.
The new customer needs a loan for $20,000 and this fund is activated. The bank loans it out at 10%. When the new customer pays it back monthly the bank would get 2% for things such as maintenance, salaries, etc.
The 4 people involved in the fund then get 2% (10-2=8 then divided by all 4 people) each month until the loan is paid if full.
There could be different "Mutual Funds" where you want less risk or more such as maybe putting your money up for a business loan, personal loan, line of credit, home loan.
So now when Shawn and Natalie want to buy their first home and they take out a loan for 15-30 years to buy their first home its real money being used to give to them to buy their home. The money could either belong to 1 large investor or several smaller people wanting to loan their money out.
Gives a whole new idea to Community Banking huh?
This way there is real money used (gold and silver) and lending (expansion of the money supply to "grow" the economy) but without the inflation caused by printing money).
With the bank being a nonprofit it should (won't say will not) go for risking loans as its like a professional middle man managing your money not their nest egg.
good idea, i as well have been thinking about this. i am a economics major, just a undergrad. I would love to work/volunteer for this cause.
Good luck!
Need to check into that whole non-profit not charging interest thing. I found this, http://www.justanswer.com/law/12d94-non-profit-cha I give it weight because the person is saying they are an attorney and therefore they have skin in the game for giving the right answer, not 100% guarantee of being right, but at least it is better than someone with unknown credentials
but I wished that everyone understood government is never the solution, its the PROBLEM!!! Because if the government required the banks to keep 100% of their depositors money, things would be totally different! Nor would our tax money go to bailing out these banks due to their bad investment decisions.
-----------what??
Basically you're advocating that the government take over the banking system then? I'm not sure who exactly would want to run a bank that costs money to run without being able to make any profit...
Your suggestions are very similar to a credit union. A non profit organization who uses the profits to either expand the service options to the customers or sends it back as a dividend. The members (all individual accountholders) then decide what to do with the money and vote the board of directors. True it is not technically like a bank as they have a limited service region requirement whereas a bank can expand and serve as far and wide as capital permits. Nevertheless, a credit union is virtually a non-profit bank where any profits benefit the members collectively.
I would add that many credit unions are part of a shared co-op network of credit unions which give them the same breadth and scale of large banks. I am a part of my local credit union who is a member of that coop network and have access to over 6,700 branches for account access (like any other branch) and 28,000 fee-free ATMs (including 5,500 7-Eleven locations). You can go to http://www.cuswirl.com/ for details on all that. Now with 6,700 locations and 28,000 ATMS I believe that is a reach that gives Bank of America and all the big banks a run for the money. Yet all of the profits of the shared network and the credit unions are reinvested into service expansion for the members or returned back as dividends. If you are not part of a credit union, you should consider one today. They are called credit unions but they offer checking, savings, loans, etc.
I have an idea as to how to get around the interest charges. First let me say, I am not a business or law expert and this is just a personal thought but my understanding of why interest is charged to basically protect the money lended. Depending on the risk of the money that is being lent out, determines the interest rate at which the money will be loaned. So... what if the banks charged an interest like a normal back but then (lets say every five years) the customer had the option to have his/her loan refinance or reevaluated to determine their present risk. If their risk level dropped for example then the higher interest they had paid could be returned as a credit. This way the bank wouldn't keep the profit and the community would benefit. For example, someone with a 500 credit score will pay more in interest than someone with a 780 credit score. But if the person with a 500 credit score makes every payment on time for 5 years than that person should only have to pay a minimum interest rate just as the person with the 780 score.
MIKE: 12-19-11
TO EVERYONE WHO HAS COMMENTED ON THIS SUBJECT. i THINK YOUR THOUGHTS ARE TERRIFIC. LET US FIND A WAY TO MAKE THIS A REALITY.
ALSO, IN THIS TIME OF THE YEAR, TO EVERYONE A HAPPY HOLIDAY, AND A GREAT AND HEALTHY NEW YEAR!!
The idea of a Bank that is for people and the community is great. I do not know what final form it will take, but I do know how to make it more "profitable" than any other traditional Bank. Why? Because, the traditional Greed factor in the creation of OTHER Banks can be alleviated or eliminated in this Bank formation, allowing greater creativity and adaptability to ongoing and changing economic conditions in the USA, in the World. One Idea- Since the Non Profit Bank will be making each depositor a shareholder, then provide a method for each depositor to get both interest on his/her deposit, AND also a dividend from the "profits" generated by the operation.
Second Idea- as a FDIC approved Bank, borrow from the feds to acquire the REO assets of other banks, and/or to acquire troubled banks ( growing by acquisition). Third Idea- Since Non Profits would be the some of the Shareholders of this Bank,have other banks "donate" their REO holdings to these Non profits, generating tax benefits for other banks, creating net worth for the non profits, and creating business opportunities for the Non Profit bank in joint venture endeavors with the Non Profits to better the community- creating business, and jobs, and bettering the economy.
Please make comments to these ideas to my email address: mdbrika@gmail.com. Any comments, suggestions, etc. would be appreciated since the goal of this discussion should be the Creation of a Non-Profit Bank we can all be involved with some time next year. Thank you for your thought and comments.
ONE GLOBAL NON-PROFIT BANK THE TOTAL SOLUTION is "QUANTUM ECONOMICS"
Copyright© Mark S Filby.
'OUR GLOBAL SOLUTION FOR THE 21st CENTURY.'
WHAT ARE QUANTUM ECONOMICS?
Quantum economics is a totally radical alternative to current global economic platforms. A unique combination of free market and closed economic policies, coupled with total reformation of our traditional methods of banking and thinking towards money. Quantum economics recognises the fundamental errors in current economic policies which are collapsing globally. Quantum economics addresses the critical error of allowing a currency to become a commodity, which allows for manipulation from external forces, of which we may not know their agendas. It fully addresses the inherent problems with open economies and finally establishes total accountability from every sector of human endeavour, the legal and illegal activities of corporations, governments and individuals.
Quantum utilises an intangible medium of exchange instead of tangible paper money, notes, cheques, cash or coinage. Electronic 'money' is available to all levels of society from government and business to consumer alike. Another method of classifying this means of accounting for commerce is a form of "e" currency. Meaning the actual currency is not material but electronic. Therefore quantum as such is an alternative to cash or money. Quantum is the only viable future reality for today's electronic global economy. It is the new global currency available to everyone with access to the internet or telephone.
The current structure of the global economy, has at its base, a critical error in the usage of money, which is debt based money creation and supply. With the tradability of the medium of exchange, money was allowed to become a commodity. Put in very simple terms this means that once money became a commodity it allowed people with an abundant supply to loan money at exorbitant rates, sometimes enslaving the borrower. This meant that current economic policies allowed people to become dependent off other peoples efforts. Whoever could create a shortage of money, and then supply the demand, with interest, actually became a non productive member of society and survived or even prospered at someone else's expense. One only has to casually observe the current global economic policies and the resultant imbalances to observe this fact taken to its extreme. Resource rich third world countries are servicing impossible outcome debt scenarios, with the third world populations as virtual slaves to businessmen, bankers and their dictators.
What's wrong with money/ banking/ cash?
There is a perceived shortage of money or capital, when in actual fact; there is no shortage but a creation and usage problem. We have allowed banking to create debt instead of governments actually creating sufficient money for society to function for the sake of its citizens.
Capital flows around society often go undetected from country to country and bank to bank. There is no central registry to monitor the origin or destination of transactions. This allows 'laundering' of funds. This is how wars and all other illegal activities are financed. The fundamental error of globalisation without accountability. Overseas banks, diverse taxation laws and no common ground between financial systems. The 'global village’ requires a 'closed' economy as opposed to the current 'open' economy. A system designed to be open to scrutiny and closed to fraudulence or crime. The elite use these so called individual 'rights' to hide their abuses of wealth.
From fraud, forgery, theft, crime and the many abuses of wealth, the current economic platforms fall drastically short of being 'smart' or humane in today's society. In essence, printed money and banking have reached their sensible use by dates. Cash money requires printing, handling and physically transporting which makes it non-competitive with an electronic currency. As a tangible product it also means it can be removed from circulation and laundered into other economies or utilised for illegal activities. This is exactly how and why our planet is being gripped by drug usage and crime. Printed and coined money has been abused since its inception. It was the best thing available at the time, but today's society needs accountability from every level of society, and will embrace the solution. Put in simple terms cash and the current banking system are obsolete. Only complete denial from the reader could dispute the current global situation.
Why will we change?
We will change when the system crashes completely, this will force the democratic majority to think beyond the current system. When we see that this system surpasses the current economic model and when we are prepared to accept the truth about how inadequate our current system is. When we as a society decide to take responsibility for our lives and decide to correct society's problems. When we acknowledge that most of our crimes, poverty, fraud and inequalities are rooted in our economic policies. Economic discrimination is potentially society’s greatest problem.
This new system will remove privilege and force some to become useful functionaries of society just like the majority. On the other end of the scale, it will also signal the end of unemployment. If we have the capacity to rectify many of our social ills and the only limitation that currently exists is our 'shortage of money' and the quantum system rectifies this problem and practically removes any fiscal problems, then why would the democratic majority support a system for elitists or people evading their responsibility?
What is this new system based on?
A new system based on total accountability, will help work towards eliminating crime. The implications are incredible. The banking industry as you know it will be transformed. The new system will have only one point of record for every transaction, globally. This will eliminate fraudulent activities. As a society we can fully trace every economic transaction on a global basis, we can then eliminate the so called tax evasion havens, money laundering and most illegal transactions. Accountability from the bottom right up to and including the record keepers. A system that is totally open to inspection. If there is nowhere to hide money, there are very few areas for lies.
This will be a non-profit banking system for the world.
Why will it be non-profit?
Our global village needs a new system to rectify the current shortfalls being experienced in every sector of our communities. We need a new way to address unemployment, poverty and crime on a global basis. We no longer are individual countries with our own internal economies. It is time we accepted our role in society beyond short term profit outcomes. In essence we have to remove our bankers for the democratic majority. We can no longer disclaim our knowledge of how severe life is for our fellow man, when we are presented with a solution. Can we tolerate people starving to death because of profit? There could be no justification for change, if quantum was only changing the power base, not rectifying the problem. The actual 'power' should be within the hands of the democratic majority, not with some elitist minority group of bankers, dictators or people who accept a system based on keeping people as slaves by utilising economic principles which were forced on society many years ago. Nothing justifies this behaviour.
Current economic budgetary controls hinder mankind from solving its problems. Therefore if we remove the banking industry and maintain the medium of exchange as an institution for the benefit of society, then society would never again have to play the existing banking game. The end of the current system. Current global economics prove that the current method is fundamentally flawed and failing pathetically. Imagine our global society with the 'profits' from banking being redistributed through all sectors of society. No longer would there be so many financial restrictions placed on society's endeavours. Imagine a world freein
jasonoberle2010@gmail.com
I'm in the U.S. and Very interested in being of service.
max 23 months ago
Great idea a non profit bank for the people it would be an instant success in the USA or the world