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

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

#171

Post by elliekelly » Wed, Apr 22, 2020, 5:04 PM UTC

ksdale wrote: post #128

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…

Everyone said they weren't taking any risk, but all the money was distributed and now they're getting sued by people who didn't get some.

To be fair that’s a risk created by the financial institutions in the way they chose to implement & process the loans, not a risk inherent in the structure of the Paycheck Protection Program. A bank that processed these loan applications fairly and in the order they were received doesn’t really need to worry. (Whether such a bank exists at all is a different story.)

But even the banks who blatantly processed the applications in an unfair or discriminatory manner probably aren’t losing much sleep. The clients with the resources & connections to make a stink are the clients who got approved. Funny how that works.

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

#172

Post by JSavageOne » Wed, Apr 22, 2020, 5:05 PM UTC

lordnacho wrote: post #3

Gotta 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 that was interoperable with the rest of the banking system?

Many economists and others have been calling for this [1], and seeing the replies it looks like many countries already implement this.

If this existed, then we wouldn't need to funnel 3% of these emergency loans into the private banking industry, a pretty outrageous loss of money for what amounts to some modest paperwork.

[1] https://www.npr.org/sections/money/2018/07/11/628173553/fed-...

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

#173

Post by grecy » Wed, Apr 22, 2020, 5:05 PM UTC

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…

Six months ago any company making astronomical profits, charging for their services and marking up products was fine and everyone accepted it.

Now suddenly everyone is questioning if a bank should charge such huge fees, if I should be allowed to markup N-95 masks, etc.

When Nike make a pair of shoes for $4 and sell it for $400 nobody seems to care. By now it's illegal and banned in many places to mark up toilet paper and hand sanitizer.

Not only should we be asking if banks should be making $10B in fees during this time, we should be asking if every company should be doing what they were doing just a few months ago.

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

#174

Post by pathseeker » Wed, Apr 22, 2020, 5:05 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.

Banks don't make money from "online banking". They make their money from issuing loans. A ton of those loans are going to go into default so banking is going to be hit just as hard as other businesses, it's just going to happen in 3 months instead of today.

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

#175

Post by complianceowl » Wed, Apr 22, 2020, 5:05 PM UTC

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…

One of my friends is the VP of a community bank with probably somewhere around 60 locations locally. It's completely local; the businesses they work with are the barbershops, car washes, and bakeries we have in our communities. He said it's never been this crazy at the bank, working 18-hour days to make sure everything is processed timely. People automatically think of Wells Fargo, Bank of America, and Chase, but folks need to remember the amount of resources it takes to roll this program out, and that not every participating bank is a behemoth Wall Street too-big-to-fail bank.

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

#176

Post by grecy » Wed, Apr 22, 2020, 5:07 PM UTC

alexpetralia wrote: post #13

theplague42 wrote: post #6

Earlier quoted context omitted.

There have been suggestions over the years for the post office to offer banking services. They have branches literally everywhere, they're independent yet still a government agency, and have no profit motive.

I could not imagine the amount of financial, operational, technological and regulatory infrastructure that would need to be ported over, however.

There are plenty of comments in this very thread that give examples of many other countries already doing it, including countries that have way lower GDP/Person than the US.

Are you saying the US is incapable of doing what is already being done in many other countries?

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

#177

Post by tmpz22 » Wed, Apr 22, 2020, 5:07 PM UTC

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…

The problem is they did a terrible job at it AND took a huge profit for themselves. From what I’ve heard many large banks started denying applicants very shortly after accepting applications - this after forcing many companies to submit paperwork multiple times over errors the bank made itself.

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

#178

Post by [deleted] » Wed, Apr 22, 2020, 5:07 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.

[deleted]

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

#179

Post by ksj2114 » Wed, Apr 22, 2020, 5:08 PM UTC

This fee doesn't seem that unreasonable, but I do think best solution is for businesses / people to have deposit accounts at the fed

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

#180

Post by jellicle » Wed, Apr 22, 2020, 5:09 PM UTC

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…

How many man-hours do you think $10,000,000,000 gets you?

Alternately, what do you think the pay per man-hour ended up being?