Two years later, following threats of big fines, Whalebone looks little like the low-cost community banking alternative to fee-gouging big banks that
Still, the 33-year-old
As does his defiant streak.
After receiving a warning letter in
Among them were changing the operation's name from "Bank" to "Banco," replacing deposits with "never-ending gift cards" that paid interest in store credit, and replacing loans with "neverdraft cash sets" of
Unsatisfied, regulators followed up with another letter six months later. Among other things, they appeared unimpressed with the switch from "Bank" to "Banco."
"Spanish-speaking customers may find the name to be confusing and assume that you are authorized to engage in banking activities," the letter stated, requesting that
The department also asked for more details about other changes to Whalebone's various "activities," saying regulators lacked enough information "to render a conclusion as to whether there is a violation of the pertinent laws."
The letter asked for a response by
"I apologize for the delay," he wrote in his emailed response, explaining that the department's letter initially had been misplaced in a pile of junk mail.
"When I found it, I read it briskly and put it in a safe place. So safe, in fact, I did not rediscover it until yesterday."
Whalebone had stopped offering check cashing services and "neverdraft" cash advances to the public, he said. Only Whalebone "members" who open an account by buying a gift card can "borrow" or withdrawal money, and only up to the amount on their cards, he explained.
"As you can see, we have simplified our offerings," he wrote.
He asked that he be allowed to continue to use the word "banco."
"Although we are open to Spanish-speaking customers, we have not attracted any and we have clearly posted that Whalebone is not a bank or member
It was unclear whether the transformation at Whalebone (an anagram of the words "whole bean") would end regulatory scrutiny.
The banking department declined comment, as it has done repeatedly since an initial statement almost two years ago indicating it would be moving to shut Whalebone down for, among other things, not applying for a banking charter.
In an interview earlier this month,
Some borrowers "weren't being cooperative" when it came time to repay their cash advances, he said.
"We got the money back, but it was a lot of work."
Whalebone also "ate some bad checks."
"Open lending and check cashing just wasn't working,"
Now, he's changed his mission.
"When I first started out, I was just really upset about the practice of overdraft fees. What I got clear on is it's not just the banks. They are one tentacle on the giant octopus that is the Federal Reserve and the banking elite."
For now, Whalebone, with roughly 30 cardholder members, is aiming to support a digital economy free of banks by acting as a cash exchange for digital currencies, such as Bitcoin.
"It's a way for people to hold cash without commercial banks," he said. "I don't know of any other Bitcoin ATMs in
The shop has since reopened on an abbreviated schedule and is slowly rebuilding, he said.
Whalebone also managed to avoid a run on deposits.
"We assured them we were solvent and no one took their money out," he said.
"When we reopened, our dedicated folks were back using Whalebone interest."
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