'The Bank of Rodolfo' : Planet Money A listener shares the story of an unusual financial instrument used by a friend.
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'The Bank of Rodolfo'

MaryEllen writes:

The other day, I heard something that related back to one of your shows on financial tools, that I thought would be of interest. I really hadn't heard of anything like this before, but I'm sure it happens all the time.

My fiancee's sister recently asked him for a loan to buy a trailer. I know that his sister and her husband both work hard and are very frugal with their money. It surprised me that they didn't have $5,000 saved up. My fiancee explained that the reason they didn't have the cash on hand was because they had just wired their money to a bank in Mexico. He said that they get a higher interest rate there than any savings account they would have here.

I was confused because I didn't think that any Mexican bank would pay more interest than some of the banks here. In any case, I asked "What bank do they send it to?" and he said "The Bank of Rodolfo." Rodolfo is their other brother who lives in Mexico. So I said "Oh so they don't really have a bank account in Mexico."

My fiancee explained that Rodolfo takes the money and loans it to people in their pueblo for farms and businesses and charges them interest which he then returns to my fiancee's sister. So I asked, "Does he take a portion of the interest for himself?" "No," my fiancee said, "Rodolfo refuses to take any money." Apparently it's Rodolfo's way of paying back his sister for when she sent him money for the spinal surgery he had a few years back.

Personally, I thought it was a really good deal because this money was being reinvested into the town in Mexico, where small farms and businesses were beginning to thrive, and it was a way for the families here in the U.S. to make the most out of their own money. To conclude this little story, my fiancee lent the $5,000, and his sister bought the trailer. The following week Rodolfo wired the money back and my fiancee was repaid.