A new blog on bank “derisking” of charity accounts, authored by C&SN’s Andrea Hall and published by American Banker, has generated comments from former FDIC Chairman Bill Isaac:

“Andrea Hall shines a light on an extremely important issue that is getting scant attention from Treasury, FinCEN, bank regulators, and even bankers. More and more churches and other charitable organizations are being driven from the banking system due to fears that some of the money they handle might wind up in the hands of terrorists and other criminals. Less developed countries and their banks and citizens face the same problems as the charities. U.S. banks and government agencies disclaim responsibility for the situation and blame each other.

This situation is creating extreme hardship for countries, organizations, and people least able to cope with it. It’s long past time for leading banks and government officials to stop blaming each other and sit down to work out common sense solutions. The solutions won’t be perfect — some funds may well escape the net — but there is no doubt we can do much better than we are doing today.

We have moved from a system that was designed to track the movement of money to a system that is forcing the money out of the legitimate banking system and into the shadows were it is almost impossible to track it.”

Bill Isaac, former Chairman FDIC