Is a good bank possible in the United States?

[Bones]

This is a question I have been thinking about for a while. Within the current legal, political, and economic system, can any kind of bank that treats its owners, customers, and employees fairly exist? If it does/can/cannot, then how or why not?

Some of the points I am thinking about:

Independent of other banks
Provides service to a single geographic community and the number of employees, investors, and debtors is limited
The customers share the profits as interest on customer deposits and payment of interest on customer loans
Participation is voluntary
Employee compensation, interest rates, and rates on loans are determined by a model combining the consumer price index and a price index determined by a more regional basket of goods
Profits (somehow) gain tax exempt status

I think some of these points would be good for insurance companies as well.

However, I would really like to hear what you think about the above questions. I am just sharing my ideas.

[tism]

I'm going to equate your "good bank" with "free bank" and "free money," that is, a system of money & banking which is free of any sort of violent (extra-market) control. Is that OK with you? I hope it does not appear that I'm hijacking the thread to promote my ideals. But the topic of money and free banking is of particularly great interest to me.

The money we currently have with centralized banking is of course not free. To see this, one only has to identify that the money has multiple classes of users. With non-free money, there exists a privileged class of its users which can manipulate its flow (where it goes), volume, the interest rates it charges for different uses, etc. The non-privileged users of money don't have the free choice (i.e. consent is not observed) in whether to follow these rules. The violent part comes from the fact that other forms of money which might compete are violently prohibited by the state, so there is the extra-market force beyond the free market pressures affecting the value (and cost associated with) using free money relative to non-free money.

This is a question I have been thinking about for a while. Within the current legal, political, and economic system, can any kind of bank that treats its owners, customers, and employees fairly exist? If it does/can/cannot, then how or why not?

It can exist, but will have difficulty (extra-market imposed costs) working successfully with the (near-universal) presence of non-free money supply and banking.

Independent of other banks

So it would probably not use the existing non-free money supply. But, instead it would use its own money, or share with some common free money used by other banks. There may also be many different forms of free money being used in the same geographical area, so not all banks will use the same money. But that's just a natural result of money being free.

Provides service to a single geographic community and the number of employees, investors, and debtors is limited

Limited, how? And by who?

Participation is voluntary

Yes!

Employee compensation, interest rates, and rates on loans are determined by a model combining the consumer price index and a price index determined by a more regional basket of goods

Yes but be careful about how tightly determined the model is. You already suggested that using the bank is voluntary, so the rates it charges for its money isn't going to be determined exactly by any fixed model or basket of goods, but by what its users actually freely do with it.

If the money is actually free, not controlled by extra-market forces, then the people using the money would be perfectly free to ignore whatever price-of-goods index the bank tried to determine.

I think some of these points would be good for insurance companies as well.

Banking, at least for the purpose of savings, IS largely the same thing as insurance.

[Bones]

I'm going to equate your "good bank" with "free bank" and "free money," that is, a system of money & banking which is free of any sort of violent (extra-market) control. Is that OK with you?

That is okay with me. I was thinking of "good" in a sense that the bank treats all its stakeholders fairly, as in no one is being taken advantage of. I feel that the connotation of "free" in the context you provided is equivalent.

So it would probably not use the existing non-free money supply. But, instead it would use its own money, or share with some common free money used by other banks. There may also be many different forms of free money being used in the same geographical area, so not all banks will use the same money. But that's just a natural result of money being free.

I see what you are saying, and you may be right. You can't really use the same currency as other banks and remain independent. This is definitely something I overlooked. I do not know if there is a way around this one in the United States that would be legal. I was thinking that marking the money to a price index and somehow gaining tax exempt status would offset the results of the manipulation of the money supply by those in control. However, this is really not true, since the change in the price index (the amount to be repaid) and the change in the amount a debtor that can earn (the ability to repay) may be not be the same when the dollar is manipulated by outside forces. Can you think of any legal way to get around this? I can't. Would the bank be acting fairly to allow participants to contract to such an arrangement? If participation is voluntary, then the debtors would not have to repay their debt if the money manipulators make repayment unreasonable, and no recourse could be made other than the inability to borrow more funds from the bank. The investors would have to be very careful about the loans in the amount and to who they are made. This is really starting to seem like it would not be able to work, however, and I am sure I overlooked a lot in what I just wrote as well.

Limited, how? And by who?

I was thinking that it would have to be limited in the number of investors and debtors and possibly even employees in absolute terms specified in advance. Investors are permitted to borrow, but not to transfer their interest to a new person. The new person may be able to invest if the total number of participants has not already been met. Alternatively, the borrowers are allowed to become investors without being considered a new person. So basically, once the bank meets the maximum number of participants, it would be guaranteed not to exist indefinitely. I thought that this would be a good idea for a few reasons. First of all, since ownership cannot be transferred, it would limit the investor's interest to the amount that can be withdrawn rather than the amount it can be sold to others who may be speculating. Limiting by geography would also serve as a barrier to investors' from outside a community from speculating and attempting to take advantage of a community. This might also prevent any one set of stakeholders from gaining too much power as well. While these may be limitations, I do not think that they would prevent the bank from being free, since the terms would be specified in advance and participation would be voluntary. I am not sure how the geography or number would be determined, though I do think that it should be done in a manner to prevent there from being noticeable differences in the socioeconomic makeup amongst employees, investors, and debtors. Again, to prevent people from being taken advantage of.

Yes but be careful about how tightly determined the model is. You already suggested that using the bank is voluntary, so the rates it charges for its money isn't going to be determined exactly by any fixed model or basket of goods, but by what its users actually freely do with it.

If the money is actually free, not controlled by extra-market forces, then the people using the money would be perfectly free to ignore whatever price-of-goods index the bank tried to determine.

I was actually more concerned with the model not being tight enough. The model would have to somehow be predetermined, and independently (if that's possible) measured. What fears me is that unless there is complete transparency in advance of how the wage rates, rates on loans, and interest rates will be set, then a certain group of stakeholders will try to forcefully manipulate the rates so that they can benefit the most. This is another reason, why I think that it may not work. In the United States, investors are in a much more powerful situation than debtors. They have extra money they don't need, while the debtors may in fact need the money. So while the terms may be negotiated and agreed upon by both sides, the investors have an inherent advantage in the negotiations. So, more often than not, the investors are going to take advantage (i.e. treat unfairly) the debtors. Even if the bank could legitimately come up with a predetermined model that treats people fairly, why would someone want to invest in a that system when there is another system they can invest in where they have an unfair advantage. I was thinking that if the investments were to debtors within the same community then they would be more inclined to act fairly (on both sides), but that may be a farce.

[tism]

I was actually more concerned with the model not being tight enough. The model would have to somehow be predetermined, and independently (if that's possible) measured. What fears me is that unless there is complete transparency in advance of how the wage rates, rates on loans, and interest rates will be set, then a certain group of stakeholders will try to forcefully manipulate the rates so that they can benefit the most.

Well, if the money is really free, then nobody can forcefully manipulate the rates it charges anyway, price-fixing or not. If the rate charged for some money is too high, people will find another bank or another money. If it is too low, the bank will go under. Market pressures alone will keep the interest rates at some reasonable level, but only if money is free.

Sorry, if it appears that I am thinking of this too simply.

This is another reason, why I think that it may not work. In the United States, investors are in a much more powerful situation than debtors. They have extra money they don't need, while the debtors may in fact need the money. So while the terms may be negotiated and agreed upon by both sides, the investors have an inherent advantage in the negotiations. So, more often than not, the investors are going to take advantage (i.e. treat unfairly) the debtors.

I dunno about that. Again, if money really is free, then if some money, let's say the US Dollar for example, became too costly to obtain for lots of folks like you suggest, people will find some other money. A mass movement to ditch US Dollars would then result in a devaluation of those US Dollars at the same time. So, the unfair advantage may not be as great as you fear.

Even if the bank could legitimately come up with a predetermined model that treats people fairly, why would someone want to invest in a that system when there is another system they can invest in where they have an unfair advantage. I was thinking that if the investments were to debtors within the same community then they would be more inclined to act fairly (on both sides), but that may be a farce.

NO, it isn't a farce! Not really.

The thing is, if freedom really exists, then people will probably not choose to be abused very often. So, investors would have little opportunity to treat a potentially profitable debtor unfairly, because the debtor could as easily borrow from someone else with better terms. Or, in case there are no good, fair investors around, a co-op could be made instead where everyone involved brings their own resources to work with, which do not have to be borrowed at all.

(Not to get too sidetracked, but I think of abuse in a free market like this: It'd be like trying to push a string up a hill. If people are free to choose to not be abused, you're not going to get very much by being abusive. What really matters is how people relate and work with each other, and the best profit-making relationships will be those where each side is fair to the other. And the most profitable relationships will simply win over the unprofitable ones.)

[Veritas]

Just go local. Local Banks have outperformed Bank of America for years. They are more friendly and charge less fees to little people. BoA are only friendly to large bureaucrats and government shills.

Why anyone would pay a $3.00 ATM fee is beyond me while a local ATM was two blocks away.

I don't understand this insanity. Plus, they charge if you hold under $3,000?, but fucking goon Americans like this shit.

Local Banks have always been best. I have no fees for checking and mildly make out on savings that it is not worth my time. If I wanted to save, it wouldn't be in a banking account.