Slideshow 'This is an issue of fairness': Comments of the week

Published
  • August 25 2017, 2:20pm EDT

Readers weigh in on the tax-exempt status of credit unions, SoFi's application for an industrial loan company charter, ideas for mortgage policy reforms and more.

On the lack of differentiation between banks and credit unions:

"Of course, in the U.S., credit unions do just about everything that banks do except pay taxes. Tax paying business do not like having competitors across the street that do not pay taxes. The whole concept of small credit unions serving a common group such as employees of the same business is now a total phrase. This is an issue of fairness. Now, the words 'Bank' and 'taxes' are the only things that separates the business types."

Related: Are credit unions 'banks'? Debate rages in Canada

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On the argument that SoFi's application for deposit insurance chips away at the historic separation between banking and commerce:

"If you crack the barn door for one, who knows what other predators will enter. If the subprime mortgage crisis taught us anything, it's that America does not need greater concentration of financial power and resources. Yet that is the inevitable result of breaking the legal wall between banking and commerce. You can guess where that power will be centered. It won't be Main Street, America."

Related: In ILC fight, community banks will not stand down

A response to criticism of non-bank corporations that apply for an industrial loan charter:

"Calling other FDIC insured banks predators is not becoming to any of us. The concentration risk lies in the consolidation of the industry, not the expansion of it."

Related: In ILC fight, community banks will not stand down

On private, permissioned blockchains (via Twitter):

"Doesn't it defeat the whole purpose of open trustless platform if it is a closed platform with private access to trusting parties."

Related: That IBM blockchain? Northern Trust says it works

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On the argument that mortgage-policy reforms should give low-income borrowers a pathway to homeownership:

"Yet another article bemoaning 'economic inequality.' The government should and does have an interest in assuring equal opportunity for all citizens. It has neither the responsibility nor the capacity to assure equal outcomes. Some people work harder than others; some people are smarter than others. Unequal behaviors create unequal levels of prosperity. That is as it should be. Trying to mandate otherwise always fails."

Related: Five simple ways GSE reform can narrow the homeownership gap

On SoFi's recent bid for an industrial loan charter, which has opened old wounds from a similar debate in 2006 that featured a high-profile applicant: Walmart

"Wal-Mart ultimately withdrew its application for one reason: ICBA! Those in the industry at that time will recall that ICBA led the charge against Wal-Mart and won. That was then, this is now. The rise of FinTech companies has made the financial services landscape multiple times more complex. It is time for a national policy conversation about how we regulate insured commercial banks & FinTechs. Are multiple bank regulatory agencies still necessary? Is our regulatory philosophy still valid?"

Related: Flashback When Walmart wanted a bank

On the parallels between SoFi's application for deposit insurance and a similar application in 2006 by Walmart:

"The FDIC was created in the 1930's to provide stable, low cost deposits to fund American business and consumer needs. To allow niche non-bank players to pick off lucrative pieces of the industry without the burdens of all the federal bank and holding company laws and regulations is like---well,---allowing credit unions to compete for banking business without paying any taxes."

Related: Flashback When Walmart wanted a bank

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On the reversal of 2013 guidance from the Federal Reserve requiring certain matters to be elevated to the board level:

"Bank boards are business people who have full time jobs. They do not have time or expertise to manage a bank. The Fed change is the beginning of understanding this reality. Board members should focus on governing, policies, controls, internal and external audit and leave management of the bank to hired CEO's and executive staff. Hope springs eternal that regulators will someday figure this out."

Related: How much should a bank board know?