So I had the following idea for a model bank which I'll be adding to when I get around to it. I have some experience in banking and I figure that given that the property market is depressed in San Francisco (because it's a plague ridden hell hole among other reasons) I should write about how to do it correctly. One of the primary reasons that no one can open property in the city is that the puts (that is the insurance) on any building/business is too high given that the property market is essesntially a large ghetto and so no one can profitably afford to open a business. You can go to city hall and look up how much all the property is listed for (for tax reasons). Just between the empty mall and the Whitcomb hotel that's been abandoned on market street that's 2 billion dollars of empty property right there - most likely more since you would have to demolish the buildings and rebuild in the case of the hotel anyway.

The First National Bank fiasco is an object lesson in how to do it wrong. What they did in order to make more money is that they invested in a company called Silicon Valley Bank which itself was an overly leveraged high risk bank that invests in tech companies. On paper their balance sheet was OK, but they were overleveraged so that their liquidity was mismanaged. In other words, when the bill came due for deposits they couldn't sell out of shares of SVB fast enough and there was a run on the bank. Dumb. And it should have been an obvious fix - ie don't do that. Hindsight and all that. Most likely it was just greed, plain and simple.

The easiest fix for this is to create an options market for property but on the call side. Let's say that Alice wants to sell a property for 5 million dollars and no one wants to buy it for that price. A bank could buy an option to reserve the property for a month and then hold an auction for a property it doesn't own. To make it as safe as possible, the bank would never resell the option, it wouldn't repackage or sell pieces of the option. Nothing fancy. Rather it would solicit bids for the property. And then it would take the five highest bids (say) and hold a fair at the end of the month with buckets where people could put tickets in that they bought for a couple of dollars. Whichever company went over the asking price by the most amount of money from a combination of bidding and donations from the public is the company that would win the property. The bank would take a cut for organizing the fair and paying off the option, and if no one won - because no one was willing to pay what the seller was asking for even with the fair - then the money donated would be used to pay off the option and the rest would go to a local charity or organization. At the very least you'd have a party every week when another couple of properties would be auctioned off to the public.

And you make the governance of the bank as transparent as possible. Balance sheets open to the public on a monthly basis. You could make all the depositors co-op owners by the amount that they deposited in the bank - they could decide what property to buy and sell but not change the basic structure of the charter. You could set caps on what the bank owners could make. You would only let the bank buy and sell property within the city limits of San Francisco in order that the money put into the bank was used to put a price floor on the property market - no spreading risk between multiple cities like some of these other big firms do which own property in New York and Chicago that are selling and decide to hold onto empty buildings until the heat death of the universe.

Good idea, no? And it's simple enough that anyone could understand it and it only took a couple of paragraphs to explain. I'd also like to see the city of San Franciso institute a derelict property tax so that taxes are raised on any property that has been empty for more than a certain time (certainly a year) or it gets a "blighted status" or something else punative. Half of the city's property is abandoned and it's high time that shit changed. I don't want to live in a shit hole.

I should expand on this seeing as there's more to it than this. First, if you were going to make the bank rather boring you wouldn't necessarily have to have the public fairs but you could make any depositor able to contribute a portion of their income to buying out a property. But only if they were a member of the co-op which would have conditions attached (for example you might have to be so old, a member of a fraternity - such as a university or church, or be a member of the city you live in). The import point here is that the options wouldn't be floated on an exchange and so the bank would be liable to keeping a balance sheet as clean as possible.

The second thing that's important with this concept is that you can do this with anything that involves a non-fungible good with resale value that appreciates. One particularly good example is expensive drugs that are name brand that you could buy an option on to make available to the public as a generic. So even if someone comes up with an expensive AI to make an artificial drug, if you formed a bank co-op and then the members of the bank all contributed to buying out certain drugs you could spin off a generic pharmaceutical company that would sell the drugs to the public and still make a profit.

Noblesse oblige tends to have a bad name. And to some extent I believe that there's this idea that's currently going around that if you promote people to positions of power that are either incompetent or deserve it to make up for a hard life (or just after you have given a fraternity hazing that involves some blackmail opportunity). I think this is a rather stupid idea. Why not, instead, have members of a co-op contribute to causes that they think are worthy with their money, and then have the ones that are successful be a way of building a kind of credit that would be a community credit similar to a credit report, but as a way of saying "this person is good at using their money in a way that will benefit society and picking causes that are popular within the credit union?".

I also have to say that I don't believe that this idea is a particularly religiously motivated idea in any way (I have to say this to some extent because of how religiously oriented people within the community I live in tend to be - money = "jews" or money = "capitalism"). In fact, I am incredibly skeptical of carried interest. Rather I think that this is a way of using money in such a way so that it's beneficial to as many people as possible.

So I understand that many jewish temples are set up where people pay into a communal money supply but I don't know the particulars of how this works. It makes me think of a franchise model however. Once you have the set up for how this would work with all of the requirements and the general rules then you could make it a franchise operation with the caveat that each franchise outlet would keep all of it's money separate from the main entity and if it goes under then the operating entity doesn't have a financial stake (with dues paid merely to keep the management of the entire franchise running - and you can have rules for that). Many unions operate in a similar way, but for this I would want a geographicly based bank that runs options that are non-fungible with the specific purpose of buying and selling property.