“Good banks, bad banks, doesn’t matter. What we need are new banks. And I actually think what we need — and I think the valley can play a role in this, I think there should be a new wave of financial institutions that should be created from scratch today. And they should take the role.” — Marc Andreessen.

I totally agree with Marc. Banks today are outdated and specifically our checking systems. I think checks themselves are broken and especially third party checks. A third party check is a check which is paid to the order of Person A and then actually endorsed and deposited into Person B’s account. Let’s say John owes Joe $300 and John was recently given a check from his Grandma for that same amount, $300. Instead of John depositing the check into his account, waiting for it to clear and then writing a new check to Joe, he can instead sign his Grandma’s check over to Joe immediately without having to write a new check.

The only legitimate use of third party checks is to prevent writing another check and in return, saving some time. Sounds like a big hack to me. It creates a loop hole which opens up a world of fraud. And I was recently a victim.

A couple of weeks ago, I mailed in a check to be deposited into my bank account. I looked online today and noticed it wasn’t in my account. Doing some research and talking to a friend who works at Chase, the check was actually cashed last week by someone else. Somebody must have broken into my locked outgoing mailbox in my condominium complex, stolen my check, endorsed their name on the back (turning it into a third party check) and deposited it into their own bank account.

I’m very mad at the individual who did this but even more mad at the banks who still accept third party checks. It’s absolutely ridiculous. At least they could call me (the guy on the “Pay to the Order of” line) and verify that I am indeed transferring the check to Joe Schmo. I can’t believe how easy it is for people to steal checks using this stupid third party check loophole.

Third party checks need to be burned, and immediately!