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LOOKING AT YOU BANK OF AMERICA!

Stop looking at Bank of Whatever and start looking for a local credit union. You're not obligated to help shady corporations generate profit and buy yachts and stadiums.

The National Credit Union Administration has a CU locator on their home page.

NCUA's slogan: Protecting credit unions and the consumers who own them through effective regulation.

Yes, you just need to make sure your credit union is federally insured against a default. Reading the FAQ on federal insurance of credit unions, it would seem not all of them are.

http://www.ncua.gov/Resources/ShareInsurance/NCUAInsuranceFundFAQs.htm

My sister was a credit-union auditor/consultant at one time and pointed me to this basic step-by-step guide to start a credit union...

http://www.ncua.gov/GuidesManuals/ecp/ecp.html

As to how realistic it is, well unless you can get together at least 5 people with banking experience (at least at the VP level), give it up. You will not be able to get a charter. Even then, unless you can find/raise funding committments around $2M (or equivalant initial subsidies) forget it.

FWIW, credit unions generally start losing money the day they open the door. People who have agreed to be the monthly depositors start putting their money in to the pool and strangely may want interest and/or services and the people that write share-drafts and obtain loans dilute the pool coming out of the gate. Not until the credit union creates a reasonable current loan portfolio or offers other profit generating services will they start to turn the red ink (and that generally takes years).

Having said that, there are lots of credit unions around so if you are actually serious, it's not out of the question. As to getting funding committments, you'd be surprized how many companies there are that donate stuff and how many foundations there are that put money into this kind of stuff. For a /.-er, probably the biggest obstical would be to find the people with banking experience to get a charter in the first place.

Banks, however, are another story. I'm guessing it would be nearly impossible to change a credit union into a bank (because all those share holders would have to agree), so you probably have to start by being a state-chartered bank (and maybe later turn it into a federally chartered bank). A bank is basically a non-closely held corporation with a license with the state to practice banking (not unlike a car-repair shop or other small business). Mostly states have pretty minimal requirement other than a business plan, list of directors (so they can do background checks), and reserve requirements (generally around $5M) and proof of insurance (of course if you want to offer FDIC insured deposits, that's another thing, but state insurance is generally easier to come by).

Not true in the U.S though. There's an equivalent to FDIC for credit unions.

Credit Unions are not p2p financing.
CU's are essentially banks which are cooperatively owned by their customers, at least in the USA. They are CO-OP's --cooperative businesses-- with special federally mandated rules, because they are banks. Like most co-ops: Each member is a share holder. Each member can only hold one share. Share's can only be held by members.
LINKS:
http://www.creditunionsonline.com/
http://www.ncua.gov/
and these Wikipedia entries are pretty nice and accurate:
http://en.wikipedia.org/wiki/Credit_Union
http://en.wikipedia.org/wiki/Co-operative

Go back a 100 years and read it this way: Do you really want the future of money transactions to be entirely banking based and saved in somebody else's safes?

Actually before the advent of the FDIC and NCUA you would have had very good reason for not wanting to keep your money in a bank or credit union. Just ask anybody who grew up in the depression.

I don't see a Government backed insurance company out there protecting my data. More to the point I don't see the Government forcing a reasonable privacy policy on data providers either.

It's not that hard to research and find out of a bank is FDIC insured or not. In fact you can do it online in about 30 seconds if you so desire. It returns some rather interesting information about the institution too. FCUA has a similar tool on their website for credit unions too.

I'll grant you I haven't done all this much research before choosing my bank. If they have a brick and morter location with an FDIC sign that's enough for me. I don't bank online because I like to keep my business local. Likewise I don't bank with the national-chains that have offices here (HSBC, Bank of America, etc) -- I bank with my locally owned bank. If I was going to bank online you can bet your ass that I would take the time to actually research it. All the moreso since "research" in this day and age consists of a few mouse-clicks and about 15 minutes of my time.

Anyone who sends a deposit off to a Paypal address deserves what they get. I don't think there are all that many stupid people out there -- though I'll grant you there are probably enough of them to make these scams worthwhile.

"I don't use an FDIC-insured bank. I use a credit union. They pay me better interest, I am insured...." [Emphasis mine]

You're correct--perhaps a bit too precisely correct--when you write that you're not insured by the FDIC. That's because credit unions are not insured by the Federal Deposit Insurance Corporation--credit union deposits are insured by the National Credit Union Administration (NCUA). I don't know which three "seperate" [sic] insurance companies you're referring to, but deposits in any federally-insured CU in the U.S. are insured to $100,000. That insurance is backed by the NCUA Insurance Fund, which in turn is backed by the full faith and credit of the United States.

There are some CUs that are not federally-insured. States vary on how they regulate financial institutions--there are very sophisticated, completely sound institutions that only have state charters. There are also "institutions" that are little more than investors clubs with extra paperwork to file at the end of the year. There isn't any annual cost of federal deposit insurance--the deposit insurance funds are based on "lifetime" deposits (as opposed to premium-paid insurance). Yes--there are costs associated with banking regulation: regulations that ensure, among other things, that the bank actually has cash necessary to fund its continuing obligations.

Since you mention that your deposits are insured by three different international investors, it might well be that you are not a depositor in a federally-insured CU. In that case, you're wasting money. Federally-insured CUs do not pay deposit insurance: CUs deposited 1% of their assets in 1970 to form the NCUA Insurance Fund, and with one exception there has never been a need to assess member institutions any fees for insurance since. If your deposits are privately insured, your institution is paying deposit insurance--which costs you money.

Should the U.S. government be building water projects in districts of politically influential congressmen? Nope. Should the government promote commerce by ensuring a sound currency? Absolutely. Deposit insurance is a big part of that--and unquestionably a very good thing.

...

I say give us more non-bank banks. If I could find an unregulated money-holder for me, I'd use it immediately IF they had good third party insurers, better interest, and less government big brother intrusion into my transactions.

Hey, I don't mean to undercut your frothing-at-the-mouth anti-regulatory libertarian fervor, but Credit Union deposits are insured by the government.

Don't let facts get in the way of your rant, tho. Moderators, a 5 rating for that post is silly.

I agree that the premise needs to be questioned.

One stop shopping sounds like a good deal for the business that gets it, but open standards that let customers shop around more easily for services sounds even better! The one stop I like to make is at my keyboard, proceeding from there to whatever financial institution suits the need at hand.

For convenience and a great place to start, a free checking account that allows bill payments without any fees makes sense (I use SFNB with satisfaction, but there are others as well). For savings here in the U.S., credit unions provide a better return than commercial banks. For anything else, well, you tell me; I'm still working on it.

The right tool for the right job is the way to go.