Welcome to communism

We are seeing our free market capitalism disappear before our eyes.  

SEC bans short-selling

Fed takes control of AIG

Treasury set to bail out Fannie Mae, Freddie Mac

The founding ideals of our country are so closely tied to the basic premise of credit unions (member-owned, democratically controlled) that I now can see how credit unions will be different in the future: they won’t exist.  Whether the threat comes from the Treasury Department’s Blueprint for a Modernized Financial Regulatory Structure, which omits the NCUA from the President’s Working Group on Financial Markets and merges the NCUA with the new FDGA (Federal Deposit Guarantee Administration), or some new “measure” that the government takes to shore up the markets, credit unions will face a major threat if the government continues to bail out large financial institutions.  

Imagine telling our members where they could spend their money at.  Oh, I’m sorry, we have a corporate agreement with Chevron and you can’t buy gas at Shell or BP.  Mister Member, we’ve noticed you’ve spent too much money in Vegas and Atlantic City in the past few months so we’re going to put your assets in control of the credit union to insure proper usage.  Crazy you say, right?  AIG messed up and rather than letting the people who took the risk get hammered, the government is bailing them out.  Banning short selling is even more shocking to me than that.  

This is a silly argument, but what would happen if a CU told their members where they could spend their money?  The members would leave.  Or using the US-credit union analogy again, we’d use our democratically elected officials to change the rules.  

I’ll leave you with a quote from the 10 Planks of the Communist Manifesto:

Centralisation of credit in the banks of the state, by means of a national

bank with State capital and an exclusive monopoly.

Big banking news from Second Life

Second Life LogoSecond Life issued a statement today effectively banning in-world banking.

“As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy.”

After the collapse of Ginko Financial last year, many residents of Second Life began raising concerns about legalities of in-world banking.  It’s a shame that Second Life couldn’t come up with a way to make this work.  They do make provisions for organizations that have valid financial institutions charters or the applicable governmental registration, but as their last paragraph says, “We will not apply this policy to companies who submit a registration statement, charter, or other applicable license from a governing regulatory authority, or who are merely conducting marketing or education, but not accepting payments.”

So what is there left for FI’s to do in Second Life that could actually have a real world impact?