A Bank that Makes Lemonade

Kids these days can't just drag a crate to the end of the driveway and call it a lemonade stand.

They need a logo, a website, a social networking strategy, someone to ensure regulatory compliance, and, yes, even a banker.

Nine-year-old Nyla Higgs turned to Young Americans Bank to navigate these complexities.

"They helped me write my business plan," she said.

The late cable television pioneer Bill Daniels founded Young Americans Bank 25 years ago to demystify banking for youthful entrepreneurs like Nyla. Nobody expected it would survive this long. A Wall Street Journal headline heralded its opening in August 1987 as if it were a faddish toy store: "What could be cuter than a kid first learning the joys of ATMs?"

These days, banking is no longer cute.

"The industry has gone from one of the most trusted to one of the most despised," said Richard Martinez Jr., chief executive of Young Americans Bank.

Interest-rate manipulations, unexplained trading losses, money laundering for drug lords and rogue nations--these are just some of the allegations dominating headlines in the global banking industry.

Young Americans Bank focuses on how the banking industry is supposed to actually improve civilization, Mr. Martinez said. With little more than $14 million in deposits, the FDIC-insured, state-chartered bank offers startup loans for almost any kid with an idea, even kids who make wallets out of duct tape. Its largest loan ever-- $50,000--went to a kid-owned fence company, Mr. Martinez said.

The bank makes car loans to 16-year-olds but it will swiftly dispatch the repo man if they default. "That may be the best lesson they learn," Mr. Martinez said. "We can't candy-coat things too much for kids. We've got to give them real life."

(See, kid: If you default, the bank hires a repo man to take your car. And if the bank defaults? Well, the bank hires a lobbyist to take your tax money.)

The first customer at Young Americans Bank a quarter century ago was none other than Margaret Hoover. She was nine years old, and depositing money she earned selling lemonade.

NBC's Tom Brokaw interviewed her on national TV. It was one of the most exciting moments of her young life. When she grew up, she went to work for the Bush administration. And today, she's a CNN political contributor and the author of "American Individualism: How a New Generation of Conservatives Can Save the Republican Party."

Her book is in part a tribute to her great-grandfather, President Herbert Hoover. Ms. Hoover, who now lives in New York City, told me she once came home from school in tears after hearing the rumors about him. Her teacher had just read a text listing great-grandpa as one of the leading causes of the Great Depression.

"The whole book sort of blamed him," she said. "It focused on Hooverville, and it focused on suffering.

"As an adult, I've learned to separate myself," she added. "President Hoover was a scapegoat for the Great Depression."

Ms. Hoover's former boss, President George W. Bush, is a scapegoat for some rather depressing economic times as well. "I don't think any president has singlehandedly caused a depression," she said.

The truth is always complicated. So is banking.

Nikki Higgs opened accounts for her two daughters when they were just six months old. "If I raise two entrepreneurs, instead of two employees, they might not have to struggle from paycheck to paycheck," she said.

This banking relationship led to her daughter Nyla's participation in Lemonade Day, sponsored in cities across the nation by a Houston-based educational nonprofit called Prepared 4 Life.

Under the brand name that Nyla created, Aahhh2js Lemonade, she charges $2 a glass and $10 a gallon. That may sound steep, but it's not just any lemonade. It's Nyla's award-winning strawberry green-tea lemonade--and it's cheaper than Starbucks.

Nyla is now shifting sales and distribution channels. During Lemonade Day in June, zealous Denver park officials tried to shut down at least one lemonade stand, apparently unaware of a mayoral Lemonade Day proclamation permitting such enterprises in public parks, said Lemonade Day spokeswoman Briar Sangiuliano.

As a result of such crushing and misguided regulatory oversight, Nyla is focusing on Internet sales at www.aahhh2js.com and a similar Facebook page. She has paid back her startup loan and is now fully capitalized for expansion. Over the past two years, she has won a $1,000 prize for best-tasting lemonade and a $2,000 prize for best entrepreneur on Lemonade Day.

"I made a lot of money," she said. "I put the money in the bank."

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at al.lewis@dowjones.com or tellittoal.com)