WASHINGTON — Andrei Cherny knows how ugly the financial industry can be.
He’s a former financial fraud prosecutor and an expert in financial regulations who spent three years fighting against home mortgage fraud, credit card fraud and corporate crime.
As the editor of the journal Democracy, Cherny published a piece in 2007 from a then little-known law professor named Elizabeth Warren. In it, she proposed a consumer safety commission for financial products.
Warren’s novel idea would become today’s Consumer Financial Protection Bureau, and its author would be elected to the U.S. Senate from Massachusetts, largely on the basis of her campaign to rein in and regulate the financial industry of the late 2000s.
Cherny worked alongside Warren on her crusade to protect consumers, and went on to advise President Barack Obama on how to do the same. Now, he’s using this experience to introduce the U.S. to a new kind of banking.
Cherny founded Aspiration in late 2014 as an investment advisory company whose investors paid the firm only what they thought they should pay. Traditionally, investment advisers have charged fees of 1 to 2 percent annually, based on how much money the investor gives them to manage. In the financial industry, Aspiration’s model is unique.
“Despite a lot of people on Wall Street who thought we were crazy, the pay-what-you-want model has worked very well so far,” Cherny told The Huffington Post. “The vast majority of customers are very fair-minded, and the number of people who end up paying zero is very small.”