Re: Financial innovation
From: balaji (balajiouraynet.com)
Date: Fri, 16 May 2008 14:54:36 -0700 (PDT)
Yes, Matt is correct here.  The Kirtland Bank was a noble experiment, and
well intentioned.  But the financial panic of 1837 affected everyone, and
dozens of banks across the nation collapsed that year.  The Kirtland Bank
was only one of many, and its failures can only in an indirect sense be
attributed to its religious leadership.  Remember, there was no banking
regulations at this time; banks could issue their own currency; and there
were no substantial capital requirements.  Ben Bernanke wasn't there to
arrange a bail-out, either.

On the larger issue of new financial instruments, I see no reason
cohousing shouldn't try to develop some.  But I am no expert here.  I
defer to others.

Best wishes,

Charles
Utah Valley Commons
http://groups.yahoo.com/group/utahvalleycohousing/



> John, There is lots that has been written and said about the failure of
> the
> Kirtland Savings Association.  Whether you think it or not, please don't
> bash the beliefs of Mormons on the list.  As we're trying to get cohousing
> going in a predominantly Mormon area (Utah County UT) it will certainly
> not
> help us.
>
> There were *lots* of bank failures at that time this was one of them.  A
> large in-flux of poor people with little assets and large debts that were
> not made good upon.  "Overly" large debt to income ratios are hard for
> banks
> to support just like it is for a normal person, though what is considered
> "too" much is rather different.  If the cohousing banks are marketing to a
> similar demographic then I would expect them to have some of the same
> problems.  Some were rather unique to the Mormon experience - I doubt that
> cohousing groups are dealing with the same kind of persecution that
> Mormons
> were facing at the time (disgruntled cohousing members inciting the public
> against them, etc ???).
>
> I read through the bit of the link you provided, it's not a bad summary of
> events.  Unfortunately it gives no indication of why the bank failed.  Did
> it fail because Joseph and Sidney skimmed funds?  Did it fail because they
> were too open hearted and loaned to people who were "subprime"?  Were
> there
> runs on the bank?  Not a high enough interest rate? How did disaffected
> Mormons play into it? If you are interested I would suggest looking at a
> more thorough treatment of the subject.  Just remember that when dealing
> with a religous topic writers will always have a slant and in my
> experience
> most of the slant is biased against religous belief in general, not just a
> particular religon.
>
> -Matt Whiting
> Utah Valley Commons - forming
> Provo UT
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