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Small business rescue earned banks $10B in fees

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

#181

Post by pcurve »

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…

$10 billion from $350 billion is 3 percent.

That makes it sounds like bank is taking on some form of risk, but they're not.

Sure, bankers are paid more and there's labor involved.

But $10 billion is 1 year salary for 100,000 people making $100,000 / year.

It's obscene amount of money.

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

#182

Post by dtwest »

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.

Wow this is misinformed. Posting incorrect information in such a cocky way is detrimental to the forum.

Look at any global bank's stock price throughout this crisis. Being a lender to the businesses of a shut down economy is not very profitable.

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

#183

Post by SilasX »

toomuchtodo wrote: post #167
SilasX wrote: post #152

Earlier quoted context omitted.

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…

I apologize if my citation and my explanation were not clear enough to convey the concept in my original comment ("Federal Reserve will not issue banking licenses to allow new banking entrants to operate as narrow banks").

That point was plenty clear, and I was not disputing it, so no need for an apology. The more relevant point here is whether narrow banking is legal at all, and I was trying to bring the discussion over to that point.

If your point was merely to cite some non-blocking barrier to narrow banking, than I don't really see why you brought it up. If you want to apologize, apologize for being technically correct at the expense of providing insight.

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

#184

Post by ss7pro »

volak wrote: post #147
ss7pro wrote: post #143

Problem with the banks (and many other huger corporations in US ie: airlines) is that during prosperity all the profits are going to narrow set of people (board and investors) but during the crisis there's always bailout using taxpayers money to save them. It essentially means that profits stay with the wealthy while losses are being spread across the poor. This is no longer capitalism but communism where they ruling…

The best analogy I use for logical errors such as this is - If you have a dependent - ie a child - whom you are a primary source of care. Should you qualify for a bigger helping hand than say, the 25 year old with no children? If you agree - then now imagine you have 500 dependents. Or in the case of some corps 500,000. You have half a million dependents who rely on you every other week for a paycheck. Do you qualify…

I'm not saying bailout is wrong, but taxpayers should be handsomely rewarded for those bailouts (at least 20% APR) as those bailout companies were making a lot of money on taxpayers and never shared any profits with them (they even avoid paying taxes though various financial means).

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

#185

Post by MiroF »

MR4D wrote: post #132
MiroF wrote: post #88

Earlier quoted context omitted.

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.

> structured much more like a think tank and policy center

Uh, I agree that the central bank isn't consumer facing - but this is a bit of a stretch. Think tanks don't loan trillions of dollars.

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

#186

Post by dumbfoundded »

tmpz22 wrote: post #177
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.

I put in an application immediately with Bank of America. My business is pretty small so our requested loan was about ~$80K. I personally know others who used the same automated system after me and received a loan while I got an email a couple days ago asking me to hope that Congress allocates more money.

The problems are pretty simple. Big banks prioritized big customers, especially those with debt to the banks. If your monthly payroll is $2.5M, are you really a mom and pop shop? Big banks then collected ridiculously high fees for a simpler process than they normally conduct. I'm guessing they literally had a team that estimated the highest fee they could charge without being punished by the government.

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

#187

Post by alistairSH »

1123581321 wrote: post #121

We did our PPP loan for our agency through a small regional bank that bent over backwards to help local businesses understand the legislation and apply on time. The bank paid a bunch of salaries to be able to do this. It’s completely reasonable that they earned a small, disclosed-in-advance fee from our loan to pay for those operations.

Banks took almost 3% of the total bailout funds for loans that have almost zero risk (government backed and almost exclusively made to existing customers).

On a $350k loan, the fee was 5%, or $17.5k. On a larger loan, the fee as a % goes down, but the total value goes up. These larger loans, to my knowledge, carry no more risk, nor any more work by the bank.

Yes, the banks should earn a minimal (and probably fixed) filing fee. No, they should not receive 3% of the amount set aside for small-business assistance.

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

#188

Post by clairity »

Spellman wrote: post #153
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?

npr has never been apolitical and has gotten more political over time, through editorial choices like what stories they pursue/ignore, what angles they take, what guests they invite, the amount of airtime given to stories/guests, etc.

they were overtly pro-clinton and anti-trump (as was i) during the 2016 election cycle, and lamented the election results for weeks afterwards. you see it with this election cycle and the covid coverage too.

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

#190

Post by ksdale »

elliekelly wrote: post #171
ksdale wrote: post #128

Earlier quoted context omitted.

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 appl…

I disagree, I think regardless of the implementation, there are so many businesses that didn't get money, that banks are getting sued anyway.

I also agree that a lot of banks probably aren't losing much sleep, but that's different than saying this whole thing is risk free to the banks.

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