US credit union regulator crushed Internet Archive's non-predatory, game-changing bank

The Internet Archive's Brewster Kahle writes, "We founded a credit union to build a new path after the banking debacle of 2008 and it's been crushed by federal regulators. The regulators close 200-300 credit unions every year, and have been since their founding of the NCUA in 1970. Only a couple are allowed to start each year. We were one of four in our year."

The credit union aimed to provide financial services to poor immigrants, and its opening was attended by the Mexican consul general in New York. But Mr. Modell said that with the restrictions placed on it, the credit union would only have been able to give out what amounted, in practice, to predatory payday loans, which he did not want to do.

Mr. Modell said he accepted the restrictions because he was assured that they would be lifted within a few months. When that did not happen, Mr. Modell and Mr. Kahle began looking at opening basic accounts for companies using the Bitcoin currency, given Mr. Kahle’s own experience with technological innovation.

When the N.C.U.A. expressed displeasure with the decision Mr. Modell said, the credit union dropped the two Bitcoin companies it had taken on.

The credit union’s other ideas for expansion were also shot down. In 2014, the Internet Archive Federal Credit Union tried to team up with an organization for migrant workers, the Farmworker Support Committee, to offer bank accounts and cheaper money transfers, but the idea was eventually rejected by an N.C.U.A. examiner.

The N.C.U.A. sent its examiners on an increasingly frequent basis and requested more and more monthly reports from Mr. Modell — often asking about the credit union’s past interest in Bitcoin customers. By mid-2014, the credit union had made less than $50,000 in loans and Mr. Kahle suggested to Mr. Modell that it was time to give up.

Dream of New Kind of Credit Union Is Extinguished by Bureaucracy Nathaniel Popper/NYT

Difficult Times at our Credit Union [Brewster Kahle, Internet Archive]

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