If you can't beat 'em, join 'em: Occupy SF launches its own bank

The inevitable culmination of the Occupy movement has finally arrived: The protesters at Occupy San Francisco just announced that they are becoming bankers, by filing papers to form a credit union (for real — not satire):

Members of Occupy SF announced their ambitious plans to turn protesters into bankers by creating the People’s Reserve Credit Union. According to Occupy SF’s Facebook page:

The goal of this project is to encourage San Francisco residents, businesses, as well as nonprofit and city agencies to keep their money out of the big banks and to redistribute that money locally. Initial services will include micro-loans for the working poor and homeless, and subsidized student loans at low interest rates.

The credit union is being created with the help of San Francisco’s Glide Community Church and Supervisors John Avalos and Eric Mar. The group filed its paperwork and has already crafted a thoughtful mission statement: The credit union will serve as a replicable model for other financial institutions to reinvest wealth in their local communities. They will support microenterprise, provide educational loans, and foster community improvement projects.

My suggestion for the People’s Reserve Credit Union logo: a “dollar and sickle” in anarchist black.

The difference between the People’s Reserve Credit Union and the other banks is that other banks are eeeeeevil whereas the People’s Reserve Credit Union is good.

Welcome to the real world, Occupiers. The world of regulations and accounting and laws and audits and trying to meet payroll. This should be entertaining.

Of course, there are plenty of credit unions around the country already, and they usually make up for their small size by parking members’ deposits in ultra-safe financial instruments, to minimize the risk of failure during unstable economic times, since they don’t have the resources to diversify, as big banks do.

Will the People’s Reserve Credit Union invest safely, and follow reassuring business practices? Er, not exactly:

• The credit union will employ students and homeless, creating 60 part-time jobs.
• Issue 300 to 500 micro-enterprise loans (max. $5,000).
…

Occupy SF will soon learn that micro-enterprise loans are incredibly risky, because most micro-businesses fail. Risky loans are what caused the banking crisis in the first place — remember? Or was that too long ago for you?

It’s all fine and dandy to start your own banking institution with good intentions, but at the end of the day, if you are hemorrhaging money due to risky investments, while calming depositors with the reassuring “Don’t worry, everyone’s money is safe in the hands of the students and homeless transients on our staff,” you’re not likely to last a year. That is, unless, you learn the hard way why banks do the things they do to survive and thrive, in which case Occupy SF will become the very “banksters” they loathe.