Small business rescue earned banks $10B in fees • Hacker News Board

Re: Small business rescue earned banks $10B in fees

#151

Post by JSavageOne » Wed, Apr 22, 2020, 4:56 PM UTC

eezurr wrote: post #9

That'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?

Why is a 2% fee acceptable on money being given to the public during a crisis? Why can't the government just give the money directly to businesses without some middleman extracting a 2% fee?

Boggles my mind that anyone jumps to defend the banks in this scenario for what effectively amounts to a racket.

Re: Small business rescue earned banks $10B in fees

#152

Post by SilasX » Wed, Apr 22, 2020, 4:56 PM UTC

toomuchtodo wrote: post #134

SilasX wrote: post #127

Earlier quoted context omitted.

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.

You were speaking about the general possibility of running narrow banking. Whether it is a new bank or existing bank doesn't matter to that point, so you can't dismiss the possibility of an existing bank doing it and thereby claim it's impossible because a new bank couldn't get a license on that premise.

"Narrow banking is impossible."

'What if you did it this way?'

"I'm not talking about that, I'm talking about the impossible ways."

Re: Small business rescue earned banks $10B in fees

#153

Post by Spellman » Wed, Apr 22, 2020, 4:57 PM UTC

exabrial wrote: post #111

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.

I thought that's the norm for NPR?

Re: Small business rescue earned banks $10B in fees

#154

Post by whichquestion » Wed, Apr 22, 2020, 4:57 PM UTC

volak wrote: post #116

leothecool wrote: post #83

Earlier quoted context omitted.

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?

It seems apparent that the government could’ve distributed these loans to qualifying businesses if they wanted to. The government was able to distribute individual checks to people. It does not seem far fetched to extend this to business accounts.

Maybe someone else can describe technical blockers as to why the government couldn’t have done this. It seems mostly political.

Re: Small business rescue earned banks $10B in fees

#155

Post by krustyburger » Wed, Apr 22, 2020, 4:57 PM UTC

celticninja wrote: post #141

brentm wrote: post #133

Not 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 busin…

could they have done it at cost? Yes. Did they need to make a profit off this? Probably not. Are they relatively unaffected (due to prevalance of online banking and also reduced costs due to physical banks being closed)? Yes.

The banking industry is highly affected by the economic conditions that currently obtain. Default rates for all kinds of loans are skyrocketing, and this may just be the beginning of an extended period of turmoil that will rock the balance sheets of banks around the world.

I don’t think they deserve undue sympathy, but they are far from unaffected.

Re: Small business rescue earned banks $10B in fees

#156

Post by [deleted] » Wed, Apr 22, 2020, 4:57 PM UTC

mathieubordere wrote: post #142

brentm wrote: post #133

Not 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 busin…

you think that an administrative fee of approx $20K per transaction is reasonable?

[deleted]

Re: Small business rescue earned banks $10B in fees

#157

Post by volak » Wed, Apr 22, 2020, 4:57 PM UTC

toobigtoexist wrote: post #145

volak wrote: post #119

Earlier quoted context omitted.

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…

Except, if the truck driver consistently fails to deliver the goods, the truck driving company usually goes out of business. It is generally referred to as having actual skin in the game.

There has been no general business failure during this crisis. The government is mandating businesses be closed and businesses and employees are suffering because of it.

If you are only talking about 2008 then yes - that bailout was fucking dumb

Re: Small business rescue earned banks $10B in fees

#158

Post by i_am_nomad » Wed, Apr 22, 2020, 4:58 PM UTC

MiroF wrote: post #102

_curious_ wrote: post #91

Earlier quoted context omitted.

Imagine if you lived with an attitude like this...entitled to something just for being born. Genuinely curious: where does this come from?

Most theories of the good hold that you are certainly entitled to things just for being born - take your life for instance. Your alternative conception is far outside the norm.

Fundamentally, your retort to the parent’s (poorly expressed and now dead) reply is sound, though I believe they might have been circling the concept of negative vs. positive rights. It’s an interesting topic and one worthy of debate, though sadly that debate has become fraught with emotion and passion, to the point that it’s on a level with abortion - it just can’t be discussed in most circles.

Re: Small business rescue earned banks $10B in fees

#159

Post by Saaster » Wed, Apr 22, 2020, 4:59 PM UTC

onetimemanytime wrote: post #139

tempsy wrote: post #38

The 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 Oct…

The IRS has the capability to put money directly into business bank accounts, or require businesses to sign up for EFTPS.

Re: Small business rescue earned banks $10B in fees

#160

Post by jhwang5 » Wed, Apr 22, 2020, 4:59 PM UTC

RubenvanE wrote: post #84

jhwang5 wrote: post #64

Bank charging 2% on this flow is criminal, in the sense that interest rates are nearly negative, so 2% is practically 10, 100X the rates banks can earn otherwise. It's basically free money shoveled into banks, a massive boon.

While I agree that the fee might be high, the comparison between the two is is a false equivalency.[1] A transaction fee is something completely different from an interest fee. The first is a one time fee while the other is continues over time. [1] https://en.wikipedia.org/wiki/False_equivalence

No. whether I charge you a fee through an explicit transaction cost, or I charge you based on a hidden spread to some rate, it’s still revenue from the perspective of banks. It’s a common trick used by consumer banks (to masquerade interest based spreads as no fee loans).