NOTES AND QUERIES
219
Beyond the traditional image of most Washington banks closely regulated, largely impersonal entities insured by the federal government lie some lending institutions whose existence rests solely on trust between the people who use them.
The participants call them "banks" but there are no passbooks, no withdrawals, no Christmas clubs and no drive-in windows. There are only deposits, periodic loans and a final payoff of principal plus interest to all members.
It is a system created long ago in this country by enterprising Chinese immigrants unable to obtain conventional financing for business ventures or personal needs from established American banks. Instead they created their own institutions, informal, unregulated, relying on handshakes in place of written contracts. It is a matter of pride among Chinese Americans that over the years such arrangements have rarely failed.
Shattering that tradition, four Chinese banks here have quietly gone broke, leaving their 100 or so depositors more than $130,000 in the hole and with uncertain prospects of ever seeing their savings again.
"The Chinese community usually helps each other," said Bob Lee, a Boston restaurateur and national president of the Chinese Free Masons, whose D.C. branch sponsored the failed banks. "If everyone was doing the job right, the money should be there."
But everyone, it is apparent, didn't do his job right. For reasons that are still only alleged and unproved, the honor system failed. The pivotal figure, by all accounts, is a longtime Washington restaurateur [name].
Within the closely knit Chinese-American community, numbering about 600 downtown and 15,000 in the entire Washington area, such scandals normally are handled discreetly and seldom emerge into public view. This time, however, a civil lawsuit filed in D.C. Superior Court by the depositors offers a rare glimpse at a side of Washington life foreign to most residents.
The Chinese "banks" operate for a limited time, usually about three years and have only deposits and no ordinary withdrawals. Members deposit $10 per share weekly. Once a week, on Sundays in this case, those wanting to borrow money bid an amount they are willing to pay for the loan, in effect how much "interest" they will pay above principal.
NOTES AND QUERIES
219
Beyond the traditional image of most Washington banks closely regulated, largely impersonal entities insured by the federal government lie some lending institutions whose existence rests solely on trust between the people who use them.
kom
The participants call them "banks" but there are no passbooks, no withdrawals, no Christmas clubs and no drive-in windows. There are only deposits, periodic loans and a final payoff of principal plus interest to all members.
It is a system created long ago in this country by enterprising Chinese immigrants unable to obtain conventional financing for business ventures or personal needs from established American banks. Instead they created their own institutions, informal, un- regulated, relying on handshakes in place of written contracts. It is a matter of pride among Chinese Americans that over the years such arrangements have rarely failed.
Shattering that tradition, four Chinese banks here have quietly gone broke, leaving their 100 or so depositors more than $130,000 in the whole (sic) and with uncertain prospects of ever seeing their savings again,
"The Chinese community usually help each other" said Bob Lee, a Boston restauranteur and national president of the Chinese Free Masons, whose D.C. branch sponsored the failed banks. "If everyone was doing the job right, the money should be there.”
But everyone, it is apparent, didn't do his job right. For reasons that are still only alleged and unproved, the honor system failed. The pivotal figure, by all accounts is a longtime Washington restau- ranteur [name].
Within the closely knit Chinese-American community, number- ing about 600 downtown and 15,000 in the entire Washington area, such scandals normally are handled discreetly and seldom emerge into public view. This time, however, a civil lawsuit filed in D.C. Superior Court by the depositors offers a rare glimpse at a side of Washington life foreign to most residents.
The Chinese "banks" operate for a limited time, usually about three years and have only deposits and no ordinary withdrawals. Members deposit $10 per share weekly. Once a week, on Sundays in this case, those wanting to borrow money bid an amount they are willing to pay for the loan, in effect how much "interest" they will pay above principal.
No comments yet.
Private notes are available after approval.