Sally Helm
Appearances
Planet Money
Worst. Tariffs. Ever. (update)
Anyone? A tariff bill, the Hawley-Smoot Tariff Act, which anyone raised or lowered, raised tariffs in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects?
Planet Money
ZIP Codes!
Yeah, it shows up in how marketers reach people and looking at the zip code. And they can get very granular to areas with people who might be interested in this product or this program.
Planet Money
ZIP Codes!
As people went into military service during the war, they had all that knowledge built up about the route that they worked every day. They knew how many stairs they were going to have to climb. They knew how many mailboxes were on that street. They knew the farm next door and how you sort the mail to prepare yourself.
Planet Money
ZIP Codes!
You might have a street with the same kind of sounding name where it's Oak Street or Oak Branch Place or something like that. And so if somebody forgot to put the number on there, it helps you be able to sort that faster and figure out, oh, Margaret lives in the neighborhood with zone number 10. Problem solved. For now.
Planet Money
ZIP Codes!
And everything that goes hand in hand in generating. People sending in postcards to renew subscriptions and, well, and things like bills. As the economy grows, the bills keep coming in as well.
Planet Money
ZIP Codes!
They're wondering, how do you handle this mail efficiently and accurately every day? Because you're simply going to probably run out of a labor force to be able to handle some of this.
Planet Money
ZIP Codes!
Zip code sounds like it's really fast, but it's just an acronym. It's Zone Improvement Plan.
Planet Money
ZIP Codes!
You've got this way to be able to oh, just finally be able to put a number two into something that, you know, it's just going to get larger and larger and that population area is going to keep growing. But we'll always be able to put that under number five, number six, number seven, and be able to expand and contract as the world's changing.
Planet Money
ZIP Codes!
Some people, they feel a little bit, it's impersonal. You've got one more number assigned to you and it's not just your name anymore. It's not just your street name anymore. It's now all this series of numbers.
Planet Money
ZIP Codes!
He is an amicable, very smiley letter carrier who, just like his name, is always zipping somewhere. He is leaning forward and his mailbag is kind of flying out behind him as he is speeding towards you.
Planet Money
ZIP Codes!
And this campaign, it actually works. By 1965, about 50% of people recognize it and are starting to use it. And then that increases to about 85% recognition and use of zip code. Within the decade.
Planet Money
How to start a bank
After they catch their breath, they're like, Silicon Valley Bank is really different from us. Like, hopefully this doesn't necessarily have to change anything about our business plan. We're much smaller. We're not going to be concentrated in tech. But also, the country's faith in banking was shaken.
Planet Money
How to start a bank
And that's a problem for Fortuna because they're about to have to go out to investors and do the next key step in this process. They need to get people to believe in their business enough to hand over at least $20 million. At a time when those same investors are hearing the words bank failure for the first time in years.
Planet Money
How to start a bank
Fortuna Bank submitted their application to regulators in February of 2023. Then the biggest bank failure in years happened. The FDIC got extremely busy. Fortuna expected full approval within about six months. That doesn't happen. But while they're waiting, Fortuna does start in on the last very important step in forming a bank, raising $20 million.
Planet Money
How to start a bank
So they start going to business people and institutions and family members saying, do you believe in our idea? Will you invest? And both Ilaria and Lisa said this was way harder and took way longer than they expected.
Planet Money
How to start a bank
Fortuna's sell to investors was this. A bank is not a unicorn tech stock. It won't have that kind of return. But this investment would actually pay out in much the same way.
Planet Money
How to start a bank
In December, they technically opened as far as the regulators were concerned, but very quietly. They weren't advertising for new customers yet. They had to get their routing number from the Federal Reserve. That took a while. They had to work out all the kinks in the system.
Planet Money
How to start a bank
It was in the vault, but when they looked for it on the computer systems, it somehow hadn't been recorded. Getting these systems up and running took a lot of work, but they eventually figured it all out. Everything was showing up where it needed to be. And by late January, they were ready.
Planet Money
How to start a bank
Hearing all of this just really drives home for me just how many tiny parts make up a bank. And like just for how every single bank in the country, at some point, someone had to figure out how to do this stuff. Like none of it is just like available out of the box.
Planet Money
How to start a bank
This episode of Planet Money was produced by Emma Peasley. It was edited by Katie Mingle. It was engineered by Sina Lofredo and fact-checked by Sierra Juarez. Alex Goldmark is our executive producer.
Planet Money
How to start a bank
Those numbers used to be way higher. Before the 2008 financial crisis, there were more than 100 new banks opening in the United States every year. But for reasons we'll get into, starting a bank has gotten a lot harder. Hello and welcome to Planet Money. I'm Erika Barris.
Planet Money
How to start a bank
Yeah, how do you start a bank? Why would you bother? And is there an argument to be made that more people should be doing it?
Planet Money
How to start a bank
Right. Like, where are you going to even go to get, like, big, gigantic marble columns?
Planet Money
How to start a bank
The title company is a success. She sells it and then starts looking for her next big idea.
Planet Money
How to start a bank
And so I did. She started poking around and she found that very few banks are owned by women. Of the more than 4,000 banks in the country, only about 20 are women owned. And Lisa told us that only three of those were intentionally started by women. The others were like a father left his bank to his daughter, that kind of thing.
Planet Money
How to start a bank
That banker? Ilaria Rawlins. We met her earlier. She was the one who didn't want to show Sally the vault. When Lisa started thinking seriously about starting her own bank, she wanted Ilaria on board.
Planet Money
How to start a bank
Alaria had been in the industry for decades. She started out opening accounts, worked her way up to top leadership positions, and she'd actually worked at a startup bank before. In the banking world, these are called de novo banks, which essentially means new in Latin.
Planet Money
How to start a bank
Research does suggest that women starting businesses can have more trouble getting financing. But women own a lot of businesses and also stand to inherit a lot of wealth. If you're a bank, there's an opportunity there to help people and to make money.
Planet Money
How to start a bank
And to be fair, a lot of us never interact with any banks besides the big name institutions like Chase.
Planet Money
How to start a bank
And maybe that's kind of fine if all you want is a safe place to put your money and an app that works. But these smaller community banks are actually really important for small businesses.
Planet Money
How to start a bank
Yeah, a little local hot dog stand or new indie bookstore. They're often better off getting a loan from a small community bank. The banker might know this business owner or be willing to work with them to strengthen their plan. That ends up meaning more loans for small businesses. And that's important for like Columbus, Ohio overall, because those businesses can then hire people and pay taxes.
Planet Money
How to start a bank
So, Sally, you've spent the last six months or so talking to these two women in Columbus, Ohio, who've been doing something that in today's world is kind of rare.
Planet Money
How to start a bank
To find out why, we went to Kate Judge, professor at Columbia Law School, expert on banking.
Planet Money
How to start a bank
Yeah, before the financial crisis in like the 1990s and 2000s, it's like banks, banks, banks, banks, banks all the time. And then boom, 2008 goes off a cliff. Some years, literally zero. There's been a little uptick lately, but it's still way lower than it was.
Planet Money
How to start a bank
Unless your new business is a bank. Then low interest rates make it harder to get started. Banks don't make as much money on loans if interest rates are low. And something else happened after 2008 that would make banking an even harder business.
Planet Money
How to start a bank
Broadly, this new industry is called fintech, financial technology. These are companies like Venmo, Cash App, companies that do bank-like things but are not banks. The rise of these companies increases competition. Banks have to work harder to survive.
Planet Money
How to start a bank
Right. Small banks like Fortuna have to pay third-party vendors that help them with cybersecurity. but also with all these other basic online functions like online accounts, a mobile app.
Planet Money
How to start a bank
And it is long. It starts even before you submit your application to state and federal agencies. First, you'll want to meet with the regulators. Be like, I'm thinking of doing this. If I were to put together an application, would you by any chance be interested in reading that application?
Planet Money
How to start a bank
We're flesh and blood people. That's true. Ingrid White is deputy superintendent for banks with the Ohio Department of Commerce, the Division of Financial Institutions. She's in a couple book clubs, has two big dogs.
Planet Money
How to start a bank
Ingrid's office in Ohio will eventually give a new bank their charter. That's like a license to do business. And the FDIC, the Federal Deposit Insurance Corporation, they will eventually insure customers' deposits. This is a cornerstone of banking. It was invented after the Great Depression. If you put your money in a bank and that bank fails, it is insured by the government up to $250,000.
Planet Money
How to start a bank
That helps make it so that we all trust banks, which helps keep the economy stable. These regulators, they want to make sure that a new bank is worthy of that FDIC logo that they'll eventually get to display.
Planet Money
How to start a bank
But the Fortuna Group has banking experience. So regulators are like, yeah, we'd like to see your application. Fortuna has finished step one. Step two, Fortuna submits a draft application.
Planet Money
How to start a bank
Yeah, pretty much. It includes the business plan, also the names of the organizers. They're going to have to go through background checks.