Side Note: NPR's journalism of late has been refreshingly non-political.
Every article on CNN right now for me is a click bait headline with some weird mention of Trump like it's some sort of requirement to get it to go to press.
Small business rescue earned banks $10B in fees
111–120 of 342 posts
Re: Small business rescue earned banks $10B in fees
#112That's about a 2% fee which doesn't seem out of line with other transaction processing fees that are out there. That fee probably has built in insurance for fraud and other failures. And also the cost of the transaction. I bet that fee is the same fee as a year ago?
I do not feel the 'business as usual' a valid argument here!
Re: Small business rescue earned banks $10B in fees
#113Earlier quoted context omitted.
Paperwork AND doing due diligence on the companies more effectively than the government can right now.
The point is the amount they are earning is overly generous for the work completed. Most banks are only working with existing customers, so the DD is 99% complete. Few are reviewing applications from brand new clients.
"existing customer" due diligence seems like fair profit...
Re: Small business rescue earned banks $10B in fees
#114The thing here is the bank isn’t taking any risk here. All the loans are guaranteed by the government. So banks are really just a middle man that is transferring money from the SBA to a small business’s bank account and taking on zero credit risk. The government has the ability to send funds directly to people obviously...that’s how they are sending the stimulus checks and send tax refunds. Banks are basically being…
My understanding is there is actually some risk. If they do the paperwork wrong, or if the regulations change randomly (which they have a bunch of times already), the bank could theoretically be on the hook. Some of this reportedly happened in the last recession/bailout, so the banks are a bit gun shy. I am not a banker, so this is all second hand information I have read on r/smallbusiness and other forums while tryi…
The banks considered that risk and said they wouldn't participate unless it was eliminated.[0] I can't find any follow-up article covering if or how that resolved but I notice most banks seem to have participated in the end.
[0] https://www.reuters.com/article/us-health-coronavirus-stimul...
Re: Small business rescue earned banks $10B in fees
#115Anytime needed stimulus goes through banks, don't be surprised if it never makes it out of said bank or to the intended locations as they are self-preservation first as expected. Banks should help the river and get access to the flow, they shouldn't be a dam that holds back the flow, filtering only for their customers or large companies masquerading as "small business". Had policy sent the money directly to companies…
Can someone who downvoted this explain why you did so?
More long-winded than patio11.
Re: Small business rescue earned banks $10B in fees
#116Earlier quoted context omitted.
Businesses are not a charity - according to reported Q1 earnings last week they're losing million of dollars everyday just keeping the lights on. They've lost far more even with the fees they collected from this program. As someone said above - doctors are not working for free, why should bank employees?
Because banks lobbied congress to have this work put on their plate instead of suggesting something that might be construed as socialism.
If you know of a better way to spread 600 billion amongst 5-10 million small businesses without going through the local banks these businesses use please share with the class?
Re: Small business rescue earned banks $10B in fees
#117Earlier quoted context omitted.
What incentive does bank have to actually do due diligence, when the loans are all guaranteed by government?
Because they are giving the corporate handouts to customers who are at the greatest risk of defaulting on loans to their own bank - that's their incentive.
Again, since the loans are guaranteed by the government, what risk are the banks taking, exactly?
Re: Small business rescue earned banks $10B in fees
#118I hope they will start some ad campaign soon with pretty words about how sensitive they are for the troubles of the society and how much they support all the efforts in these troubled times!
Not controversial making profit on emergency measures, not at all! :/
Re: Small business rescue earned banks $10B in fees
#119Earlier quoted context omitted.
Businesses are not a charity - according to reported Q1 earnings last week they're losing million of dollars everyday just keeping the lights on. They've lost far more even with the fees they collected from this program. As someone said above - doctors are not working for free, why should bank employees?
So businesses are not a charity, but the US taxpayer is? Why do we keep sending money into the banking system with no strings attached? In 2008 as well as now, banks have collected billions of dollars with no strings attached, and engaged in fraud and corruption with no consequences. Doctors are not working for free, no, but they also didn't just vacuum up 10B of cash meant for patients either. Only the banking syste…
This program is vastly different from the 2008 bailouts. The banks collected a modest fee for doing work spreading money around to people who need to pay employees and rent.
In this situation the banks are simply a truck driver and small businesses are your local grocery store.
Im not going to fault the truck driver for asking to be paid to do work.
The 10B they collected was not from the government - it was paid by businesses applying for loans.
Re: Small business rescue earned banks $10B in fees
#120Gotta ask whether the banking system makes sense in its current form. - Part of it is actually a utility. Payments, sending money from one place to another, making sure there's an account at the other end of that number. Everyone needs this, yet being a huge international network there isn't a whole lot that one bank offers that another cannot. - Part of it is deciding who to lend money to. Makes sense for the bank t…
> What if we had the central bank give everyone an account
Single point of failure. Single point of power seizure. Single point of abuse for policy/NSA/FBI/DEA/BATF/CIA.
As an alternative: Each bank must speak a common language for transactions as part of their charter, aka "ACH". The task to accomplish what you wish simply becomes "Improve ACH to realtime, rather than batch" and a bunch of our problems go away. Furthermore, give banks more freedom as to how they want to interchange money so competition is created to force fees and middlemen down. The nice thing about this approach is there's a fast default path via ACH, but banks are free to innovate elsewhere, improving services.