Some quick numbers: - 10bn in Fees - 4975 Lenders - $2m per Lender I think this number doesn't seem unreasonable given the fact that the banks themselves are businesses - they have employees, training, technology, risks etc.
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Small business rescue earned banks $10B in fees
131–140 of 342 posts
Re: Small business rescue earned banks $10B in fees
#132Earlier quoted context omitted.
People always seem to miss this key point: The central bank is not a regular bank, it’s a “reserve” bank. Very different function.
My understanding was that GP was suggesting a change in the function of the central bank. Did you have a different interpretation?
I missed that interpretation, but upon rereading the post, it sounds like you are correct.
That being said, the central bank (at least in the US) is structured much more like a think tank and policy center than anything close to a customer-facing organization.
Personally, I'm not a fan of that idea, but I completely agree that banking policies/regulations need to be overhauled.
Re: Small business rescue earned banks $10B in fees
#133Not a popular opinion but considering the effort involved, should they not have earned fees? Should they have donated their time and resources? I'm sure it took a monumental effort to pull it together with the lack of clarity being handed down and the volume of loans to process in a short period of time. If the government wanted to do for $0 fees they would have figured out how to do it themselves. If a private business has to do it then they should be paid. If we are complaining about this what about 3M and everyone else making tons of money off of PPE? Obviously it isn't very palatable to hear about others making money off of this kind of thing but we need incentives for people to step up and help.
Re: Small business rescue earned banks $10B in fees
#134Earlier quoted context omitted.
They could, but would see a reduction in income by doing so, therefore an unlikely occurrence. I don’t see many banks willingly walk away from low risk income.
Yes, but you were saying that the impediment was a legal one. I'm asking if that's really true, given that a(n approved) bank can just elect not to provide some services. Surely that can't be illegal.
I’m speaking about starting a new bank, and obtaining a bank license to do so.
Re: Small business rescue earned banks $10B in fees
#135The 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…
Plus there is a non-trivial amount of pressure to keep government out of things that the private sector could do, both politically speaking and from the private sectors that stand to profit.
Re: Small business rescue earned banks $10B in fees
#136Earlier quoted context omitted.
Yes but these fees are huge with larger loans. Why are the fees percent based rather then flat rate? The banks giving out these loans are not taking on any risk with the loan. So how are they getting away with large fees associated with the loans?
Because successful fraud takes everything.
Not from the bank, they just roll back the transaction. Some merchant might end up on the hook, though.
Re: Small business rescue earned banks $10B in fees
#137Re: Small business rescue earned banks $10B in fees
#138The 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…
Not only they are not taking risk, they get to pick who gets the funding so they further optimize their bottom line, by say favoring bigger loans or loans to their most indebted customers. I hope there is a reckoning but I am pretty sure there will be bonuses to the CEO's instead.
Re: Small business rescue earned banks $10B in fees
#139The 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…
>>Banks are basically being compensated for doing paperwork.
They're really being compensated for having the network to do what the government wanted to. No one else has the capacity to give money to small (and some large) businesses in a record amount of time.
I'd pay 5% to get the stimulus cash a few days after the bill is passed...and I guess the same for the government /taxpayers. Corona loans that go out in October are no good, so you pay a fee for performance. Call that $10B a Bank Stimulus Act
Re: Small business rescue earned banks $10B in fees
#140Earlier quoted context omitted.
Would it be feasable for the government to acquire a mobile first bank and graft it onto the post office? Either chime, bankmobile, moven, or simple. Is it a space the government wants to compete against Apple and Google? If every mobile phone in the country comes with a free integrated banking service, how do you compete? Would the government better serve by using its resources to regulate interoperability and compa…
It's not politically feasible. The Republicans have been trying to kill off the USPS for decades now, and would torpedo any effort to expand it's scope in a way that that the USPS might be competent at.
Right, you need more reps who support protecting and expanding public goods like the USPS, regardless of political affiliation.