Reformed Banking- J-Model

I Love finance. The stock market, the company projections, the concepts, macro economic trends, having to care about Iraqi and Brazilian Oil Fields, I love it all (okay...maybe not so much the number crunching).

But it's an inherently unfair system, the people who get loans are the ones who already have significant money and assets lying around (generally in offshore accounts). What I'd like to see is a bank that'll give a homeless guy off the street a loan to start his own business. A bank that's both profitable and altruistic. I'm a dreamer I realize, and I thank God every day that I never tried LSD, Cocaine, or any other kind of banned substance, otherwise I'd really be tripping....loans for baby mama's maybe?

I think the world needs a new kind of bank, the kind that actually has some social development goals coupled with the profit motive that can actually uplift a country and change peoples lives for the better?

1. Don't give Loans, buy Equity: Make any business loans akin to a partnership for a specified period of time. The bank doesn't earn fees; it earns a share of the profits. This may result in Banks meddling with companies to make them more efficient, but I don't think that's a bad idea.

It sounds a bit like venture capital and private equity, but the key difference here is that the profits will be shared in equal proportion to the DEPOSITORS (Management gets a sweet stake too....If you want the best, you pay for the best). And yes, the depositors will still have access to their accounts as usual, but at the end of the year, they will receive a weighted average portion of profit. If the banks declares a loss, then the depositors lose money. It's that simple. Take it or leave, it's also completely Islamic for all of you people I get to call infidels for not agreeing with me.

2. Standards & Regulations: Require companies that the Bank does business with to meet minimum standards like actually paying a minimum wage, address environmental concerns and spend a portion of their profits on non-for profit charities.

I vote donations to the Charity of Knocked up Play Boy Bunnies....It'll be good for PR...I promise.

3. Private Loans Conundrum; Now individuals often need loans for education, weddings and perhaps a good oven toaster (everyone needs a good over toaster), the question is how do you make loans under my model? Well, as always, I have a solution.

Not only will the loan be based on their credit history, their salary slip, assets etc, but that persons severance package. No loan is to exceed that amount. Period. And a contract will be signed that they will directly debit the amount from their salary on a monthly basis and if they get fired their severance will be...Or we can just take the market value of their disposable organs and monthly blood and sperm donation revenue and factor that in....what? It's a Win.

4. This Greed is Good for an Economy: Businesses will be run more efficiently, entrepreneurs will have actual business partners, Corporations will only be on the hook for amounts that they use, The government will be assured more revenue as there will be greater documentation of taxation.

The government ought to be happy about it, because they'll be more money for them to steal/borrow. I expect imports of 100 year old Scotches, BMW's and space ships to sky rocket....oh and sugar, Pakistani like their sugar.

5. Who would invest in such a Awesome model: I think the IMF, World Bank, Asian Development bank to name a few might be a tad bit interested in this sort of innovative model. Buffet and Soros like minded people might think its a good idea to park their idle cash in a system that promotes innovation and strong returns. Any excess cash can always be parked in other banks and financial institutions using liquid'ish debt instruments.

If you think about it, what the bank will be doing is entering into partnership with businesses and that assures them a share of any profits made, which thanks to efficient measures could be higher interest.

Obviously this would be balanced down by businesses that don't perform well, but that's when the debt revenue comes in handy to cushion losses. So theoretically it works....Must drink more red bull to delve deeper.

6. It Breeds Entrepreneurs: Banks themselves will help build, train and give experience to future entrepreneurs who manage their 'loan' portfolio, the next generation can get into the nuts and bolts of how to set up, run and efficiently manage a business.

The reason why so many people are corrupt is largely because they have no other way to increase their earnings rather than make more at their current jobs through....out sourcing themselves. By having programs that breed entrepreneurs, people who have no other means to make decent money have avenues for future opportunities.

Small Businesses create more jobs that big ones. And Banks can help....because it makes them money....oh and we care...a lot....seriously.

7. Promote Efficiency and Actual Credit Standards in Banks! Banks would become lean efficient machines that would have very low rates of delinquent loans, because their own profits would be directly on the line. No more 'friendly' loans. A business better have a pretty compelling power point and business plan on why it needs money.

Banks earning would go through the roof. Particularly as it's shareholders are literally everywhere. If their are some negligent morons (as there probably will be), firing them will be a public monthly spectacle where shareholders will be invited to bear witness...Sell tickets and popcorn, it'll increase revenue.

8. Banks have a Solid reason to care about their Customers: Currently, banks do what's best for the shareholders first and depositors second. Push comes to shove, they'll tack on higher fees on the depositors to keep the share holders happy. Now by making them both one and the same, it gives the bank access to it's shareholders funds, as well as it's depositors to induce better returns.

This might give the clientele a huge power trip, but there will be a lot less Customers put on hold while folks go on their 3rd tea break of the morning.

9. Give Preferential Loans to Women. They carry men's babies and need something to do during the day, have programs that help them run businesses from their homes, be it web based, sewing, writing etc.

Give some special loans for really cool innovative businesses like a Bungee Jumping facility (I love the idea of bungee jumping).

10. Invest in your Employees, expand EVERYONE'S Horizons: Offer educational programs and opportunities to everyone within the organization. I don't care if it's the maid or the CEO, everyone is entitled to the same opportunities as everyone else. If they want to go to school or gain a degree, the company ought to be obligated to cough that cash up.

It's fair and it's good PR. The costs can be mitigated by educational loan financing or that body part collateral thingy I talked about. If a bank is truly going to succeed, it needs to realize that it's merely the sum of the people that are working there. The truth is that most banks have awful work cultures, and people feel stifled by the lack of freedom.

The more educated a banks employees they are, the more they can contribute to realm of ideas on how to improve that bank. Ivy league grads are going to have a hard time figuring out how to expand their banks presence in depressed areas, but someone from that area who has gained educational opportunities through the bank is likely to be more valuable. It breeds good will in the industry. End of the day, it's good for business to local solution via the natives of the area.

The Big Idea:

The Greatest countries in the world are ones where small innovative businesses have thrived, thanks to the freedom and sources of capital to match their dreams. They have the avenues for their citizens to gain opportunities for a better life. That's meritocracy, and the J-Model of Banking can take us one step closer to opening up that dream for others (and make a butt load of money). Banks are the forefront of change.

Governments are too big, corrupt, unwieldy, inefficient and just plain unaccountable. Banks are the only sector that actually are connected to the rest of the economy and the country.

Getting a loan is hard, as it should be, but let's make it a little bit more fair.

Credit Cards are Like a Bad Relationship...

Credit Cards; We all own one, and how can we not? They promise so much yet deliver so little. Much like a relationship.... You never know what your really getting yourself into until your stuck counting the cost. But how do you explain it's impact on someone who hasn't owned one?

If there was ever a recipe for bad romance, credit cards are it. I sure hope credit card companies and debt collectors have a sense of humor about what they do.

When you meet someone you like, you feel very happy, you see how others act around her, and you can't help but want her for yourself. Lets call her Madame Visa. You are hesitant to apply, after all, is she really worth the commitment, is she someone you want to take home to meet your parents? Someone to rely on a during a pricey family dinner maybe? 

Once you scrounge up the courage and apply for her good graces, you can't help feel hesitant. After all who knows what your past history will reveal; A faulty credit score is a tough thing to get over. But who knows? Maybe if you've been prudent your entire life you haven't been with her fickle friends Madame's MasterCard, American Express and Discovery. You might be safe. You pray that she doesn't scorn you over your past involvements. After all, they're in the past baby, I'm sure with you it'll be different. Magical even. I know your the right one for me! 

If she says yes and embraces your hand with all the comfort you dreamed off. You can't help but enjoy how magical it feels. She accepts and chooses you. She will support you (with 0% for the first 6 months even) and even give you 2% cash back, all because she is so fine that all business want you, treat you special even, just so you you come visit. All because of the lovely lady nestled in your outstretched palm.  

You think it's poor taste to swipe her once too often, after all, she is special, but you can't help but show her off and how powerful you feel with Madame Visa clutched onto your fingertips.  

How can you help but not fall in inexplicably love with her? She always says yes to your most arduously hidden desires, should you buy a light pink man-purse complete with a humidifier for $399, yes! After all, its less than $400 and she will feel oh so protected in there. 

It is only after that glow new loves brings to fade that you discover the problems that a real relationship brings. She is no longer as comforting anymore, she grows distant, disinterested even and at times severely demanding. 

You acquiesce by throwing money at the problem, the 38.95% rate is no problem, anything to keep Madame Visa happy. She wants and expects the best. After all, you knew what you were getting into....didn't you read the fine print? You find that your 'investment' in Madame Visa's happiness is really an expensive hobby....nay your life in fact. Until the day when tempers fray she humiliates you by declining your affections in public. 

You fight, you cry, you scream and you beg to be placed back in her good graces, but alas. You try and you swipe, but it is done. You have been declined. Someone takes Madame Visa off you and cuts her into small pieces, much like your heart and the realization that you are no longer whole. Your life will never be the same. To have loved and lost, is better than to never have loved at all. You will eventually recover, and hopefully learn from your past and trust your heart to someone who will really take care of you and know when to say no. A trusty debit card perhaps.    

When you get a card, you feel happy, suddenly you feel like you can do anything (as far as your limit allows). New frontiers open up as your no longer constrained by the pesky prudent limits of your disposable income, in short you love your shiny new credit card. You feel that the card and its minimal introductory fees are truly an investment, much like a nice shiny charcoal grey power suit. 

In fact, maybe you'll splurge on that awesome suit you saw at Barney's, imagining your co-workers' complements flowing on how great you look, how your boss will see how you've taken your look to a new level and are now ready for a big promotion (not to mention an earth shattering) raise and how that hot new receptionist's knees are going to buckle just seeing you gliding regally in that suit of Kings. 

Master of the Universe indeed, and your plastic lover, Madame Visa is your king maker. 

Well, you buy the suit (along with shoes, tie, belt, silk briefs and a watch), swiping your card away with care free abandon with the full knowledge that its 0% for 6 months. You don't care what it will cost, after all, your forthcoming raise will probably more than cover it all. It's an investment in the future.

Fast forward 6 months and no one has really complemented you on your suit, minus your co-workers cursory, "Is that a new suit, gee that's nice" before going back to their desks (after all, your bonus is based on the work you do, not what you wear while doing it you twat!), your bosses look at your (mostly) shiny suit silently fume that you bought a nicer suit than the ones that they are wearing and privately wonder if its because your going for an interview.... you disloyal brat! And the pretty receptionist doesn't notice your gargantuan investment, after all she sees hundreds of suits every day, what does she care/know if you splurged on a new expensive one, she's more concerned about her date with the Managing Director and the ride he promised her in (or perhaps on) his new fully loaded company issued Mercedes! 

To add insult to injury, you just saw the same suit you splurged on, on discount at Men's Warehouse no less....the nerve! 

6 months of good living start coming back to haunt you....0% is history, now your rate has ballooned to 38.95%.  Making those payments means drastically reducing spending, time to start bringing a sandwich to work. Cereal diet takes on a whole new meaning...if you splurge, its on the dollar menu at Mc Donalds. Time to down grade from Grey goose, to "affordable yet still tasty" Bud Lite. No more nights out at that hot new VIP clubs; trucker dive bars are the new name of the game (Hello STD ridden biker gals)....maybe it's time to hawk your suit before the debt collector walks in. 

And whilst all this is happening, you wistfully think, perhaps you shouldn't have insisted on getting bottle service to impress your entourage (and the honey's) every time you went out, or rented that expensive BMW for your road trip home. After all you wanted everyone to remark on how amazingly successful you are. But alas, it was but a lie, funded by Madame Visa and now she wants it all back.....with an egregious amount of interest. 

Your plastic friend was a burning plastic fiend in disguise. Now its too late. Your screwed. You wanted a life partner, and what you got was a temperamental mistress. Treat her well, and she'll be good to you for a while, but as time goes on her demands grow more the irrational, after all, paying a monthly minimum credit card of $800 per month is insane! But you must grim and bear it. After all who wants to be alone and reconvene that feeling of powerlessness?

The lesson to be learned here is that a good life is expensive, full of expectations and imperfections which we are desperate to hide to the world. Unfortunately life isn't quite so simple, even happiness has its costs. Lets just hope for your own sake that it's not as expensive as a Credit Card. But if your really good and really lucky, you will one day find that magical card that will make your life all the better for a life time.