Saturday, 15 September 2012

How the state still wants to crush banking innovation...


Or something like that;
Ethan Clay, 31 years old, opened Whalebone Café Bank seven months ago in his shop, Oh Yeah!, a year and a half after he was hit with $1,600 in overdraft fees from a local bank where his account was overdrawn by a series of checks.

Mr. Clay says he wants to offer an alternative banking experience, and has accepted small deposits and made small loans. He claims he isn't subject to banking rules because his operation is a gift-card savings account.

"It's a strange case, we don't have the authority to go close an ice-cream store," said Ed Novak, spokesman for the Pennsylvania Department of Banking. "But we are going to do something. You can't mess with people's money."

Those people with their money - they've a choice between Mr Novak's approved (and failed) bank system and Mr Clay's creativity.

...customers who make deposits earn interest in the form of "exclamation dollars." A $100 deposit is worth $5.50 a month that can be spent on ice cream, waffles and coffee in his store. It works out to be a straight 5.5% monthly interest rate, he said.

Whalebone Café Bank also loans money. Two weeks ago, Ryan Howard, a 33-year-old designer and photographer who occasionally works for Mr. Clay, said he needed $510 to attend a therapy workshop. He borrowed the money from Whalebone Café Bank, and is paying the money back at $60 a month, and will be charged $25 for the loan.

Mr. Clay said he has $550 from depositors and has loaned $1,700, an amount that includes some of his own seed money. "My goal is to get to $100,000 in deposits by Dec. 21," he said. "This is the prototype, but I hope to become the neighborhood bank."

This innovation and creative - capitalism at its finest - must be crushed by the grand alliance between the big banks and big government. A pox on them!


1 comment:

SadButMadLad said...

Wouldn't be allowed in the UK. The name of the business includes the word "Bank" which is verboten. So many regulations (6" thick) that no new bank has been created for decades.