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Feds Rule PayPal Is Not A Bank

Posted by ryuzaki0 on from the repercussions dept.

dthable writes "CNet has posted an article update describing the Feds latest ruling - PayPal is not considered a bank. The article describes the effects of not being a bank which includes the lack of government regulations."

5 of 228 comments (clear)

  1. I don't like their attitude... by SkyLeach · · Score: 5, Insightful

    "'As long as we continue doing what we are doing today, we won't be subject to Federal banking laws,' said PayPal Chief Executive Peter Thiel."

    These guys really need to back down and start telling people how they will fix the numerous complaints about their service instead of acting so arrogant, IMHO.

    --
    My $0.02 will always be worth more than your â0.02, so :-p
  2. Re:PayPal should be considered . . . by dhogaza · · Score: 5, Insightful

    Banks loan money and that's where they primarily make their money. PayPal's business model isn't at all like a banks and it is reasonable that they're not treated like a bank.

  3. Re:No FDIC insurance? by markmoss · · Score: 4, Insightful

    So once Paypal has deposited the funds into a bank, they are insured. However, if someone at Paypal takes off to Rio with all the money, leaving Paypal bankrupt, you are scr*wed.

    Think that's an impossible scenario? I remember a payroll-processing company where that is almost exactly what happened, almost 30 years ago. The company president disappeared, $5 million was missing, eventually they found his airplane at a remote airstrip in Venezuala, but they never found him.

  4. Re:Who cares? Regulations don't help us anyway. by __aapbgd5977 · · Score: 5, Insightful
    I don't use an FDIC-insured bank. I use a credit union. They pay me better interest, I am insured up to $325,000 (by 3 seperate insurance companies internationally), and they loan money to the kind of people I want to see that money going to.

    ...

    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.

  5. No longer true... by schmaltz · · Score: 5, Insightful
    Banks loan money and that's where they primarily make their money.
    If only this were true, we'd live in simpler times. Banks make much more of their profit in two other areas: investing your deposits in securities and derivatives, and interest during slack time, the time between when you've made a deposit, and when the funds actually become available.

    So, Paypal has the same opportunity to make profits with your money the way banks do, by investing it. This and their poor customer service says to me they're a bank.

    (Amazing that in this age when all banking systems are interconnected that your transfers and deposits can still take up to a week... that's something the banks didn't want written out of the system during the last revision of banking laws.)
    --
    Big Daddy, Johnny, Burp, Aunt Zelda, Scott, Slurp, Big Momma ... where's Siggy?