Frequently Asked Questions (FAQs)
(Click on a question, or scroll down to see the answers.)
 Will common good banks be insured by the FDIC?
Yes.
However, do not place too much trust in the FDIC. If many banks fail at once, the FDIC will not be able to help. Unlike other banks, common good banks are designed to provide local economic stability even in the event of a national or global economic collapse.
Sure it's good for the world, but what's in it for ME?
There are many benefits to individual common good bank depositors and borrowers, compared to conventional banks and credit unions. Quantifying or even listing those benefits can be challenging, because the common good bank™ model is so community-focused. Nonetheless, here is a specific example in which an individual might save 40% on his or her deposits, while sharing in $1,100,000 of community benefits.
 top
Can I make a deposit now?
No, you can't make a deposit until the first common good bank opens. However, you can help NOW make it possible with a no-obligation 10-second signup.
top
Can I invest now?
If you qualify financially, then yes. Take our short Investor Survey and we'll let you know. Otherwise, you have to wait until the first common good bank gets a charter. You can help make that happen, in any case, with a no-obligation 10-second signup.
top
Why a bank? Why not a common good credit union?
Common good banks are designed to be not-for-profit, community-spirited businesses. So why not organize them as credit unions, an already-existing legal structure for tax-exempt nonprofit financial institutions? The short answer is that banks can do more than credit unions. Besides, credit unions are regulated in a way that prevents them from giving away very much of their profits and prevents them from growing quickly. Here's how it works:
All banks and credit unions are required to maintain adequate capital. For stock-based banks, of course, capital means stock. For credit unions and mutual banks, adequate capital means retaining enough profits so that the ratio of net worth to deposits is at least 8%.
For example, let's say a credit union has assets of $108 million - $8 million above and beyond the $100 million that it has borrowed from the depositors (as deposits). It has, in the view of the regulators, barely adequate capital. Now let's say the credit union wants to expand by 10%, accepting another $10 million in deposits. It cannot do this until it has earned $800,000 more (or received a grant for that much), after all the costs of doing business. The credit union cannot give those profits to worthy causes; it must hold onto them indefinitely.
Now look at a similar situation in the common good bank™ model. Say the bank has sold $8 million in stock and has $100 million in deposits. In the view of the regulators, the bank has adequate capital. Now if the bank wants to expand by 10%, all it has to do is sell another $800,000 in stock. Typically, the new depositors themselves will buy that much stock. Meanwhile, any profits made by the bank (about the same amount of profits as a credit union would make) can be given to food pantries, public education, or whatever the members decide. So the bank can grow much more quickly and give much more to the community than a credit union can.
In spirit and in effect, common good bank is a credit union organized as a stock bank, in order to advance the greater good more effectively.
top
Where did this idea come from?
The idea for common good banks began in 2002 in Ashfield, Massachusetts, a small rural community in the foothills of the Berkshires. It began with a spiritual imaging exercise and informal theoretical discussions on how our society – especially our economic system and governance – might be restructured to work better, to create a more peaceful, just, and environmentally sustainable world. Through many surveys, discussions, experiments and detours, the common good bank model evolved. Hundreds of professionals and volunteers have contributed to the design.
Most of the labor for researching, developing and promoting this project has been volunteered. We have raised over $85,000 in pledges and contributions, consisting mostly of in-kind contributions. We are still seeking an additional $20,000 in contributions, to cover the expenses of securing a state charter for the first common good bank. (You can help by making a donation.)
For a more personal account of the early stages of the project, see this article by our Program Administrator, that appeared in the Quaker publication Friends Journal, July 2006.
top
Why hasn't anyone done this before?
Every individual piece of the common good bank™ plan has already been done successfully elsewhere. No one else put all these pieces together in this way because no one thought of it. Until now. And it took hundreds of people working together to come up with this synergistic combination.
Moreover, it ain't easy to start a bank. It takes a lot of money. Since no one will be making a large personal profit from this bank, a couple dozen community-minded people will have to put in $50-$100 thousand each AND thousands of people of lesser means will have to invest what they can comfortably afford. (According to securities regulations, only individuals with over a million dollars in assets can invest in a bank project before it gets a charter.)
top
Won't the common good bank just get bought out by a bigger bank?
No. Common good bank™ organizing documents will contain several provisions to prevent a takeover. For example, return on investment will always be limited to the true rate of inflation, which will make any takeover bid financially unrewarding. No one would want to take over a common good bank! Also, the common good aspects of common good banks are contractually subject to oversight by the Society to Benefit Everyone, Inc., which owns the "Common Good Bank" name and logo, so if the bank stops conforming to the common good bank™ model in any way, it will cease to be called a Common Good Bank.
The clincher is that voting is one-person one-vote, rather than one-share one vote, and a 5% minority can veto any proposal that is morally reprehensible (see the section on common good bank™ democracy). So a larger bank trying to acquire a common good bank would have to convince 95% of the depositors to give up their control. Since each community division of the common good bank will vote independently after public discussion and debate, the chance of 95% being successfully hoodwinked is vanishingly small.
top
If return on investment is limited to the rate of inflation, why won't investors just buy government bonds instead?
First of all, the true rate of inflation of the dollar is consistently higher than the United States government reports (see, for example, George J. Paulos: "An Alternative Inflation Index", September 08, 2004). Until a credible and reliable measure of inflation is developed, common good banks will calculate inflation (and therefore the expected resale value of common good bank™ stock) as prime minus 1.5%. Over the past thirty years, the true rate of annual inflation and prime minus 1.5% have both averaged out to about six percent.
Many investors will invest in common good banks because they care about social and environmental "returns" as well as financial ones. Low-income depositors will invest small amounts because, by design, stock in a common good bank will act more like a high-interest one-month certificate of deposit (CD) than like typical stock. Also, by design, stock will be so easy to buy and sell, through simple transfers to and from a checking account, that depositors will be happy to choose a higher interest rate than they receive for their ordinary deposits.
top
| 
print page