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

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

#191

Post by onetimemanytime » Wed, Apr 22, 2020, 5:17 PM UTC

Saaster wrote: post #159

onetimemanytime wrote: post #139

Earlier quoted context omitted.

>> 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.

how about handling their applications, eligibility? They don't. It's not like every business for $500K each so let's deposit it

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

#192

Post by MiroF » Wed, Apr 22, 2020, 5:18 PM UTC

i_am_nomad wrote: post #158

MiroF wrote: post #102

Earlier quoted context omitted.

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.

Maybe, although I believe that it's not too hard to have a basic argument about negative v. positive rights. Some people debate and feel passionately about the things they believe. As long as they're making arguments, I am not sure what the problem is.

I oftentimes find that good debates are more often disrupted by the person who insists on this mythic ideal of "unemotional" & civic & rational debate than the person who feels strongly about the issue.

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

#193

Post by JadeNB » Wed, Apr 22, 2020, 5:19 PM UTC

tyre wrote: post #21

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…

You’re describing “narrow” banks. While they make sense for consumers, our banking system is tightly coupled with another: mortgages. The money that you deposit is loaned out. Could the federal government do the too? Sure, and the government (talking about the US here) does end up owning a large chunk of mortgages via Fannie Mae and Freddie Mac. But the expertise and the manpower around vetting the mortgages is a _lo…

> But the expertise and the manpower around vetting the mortgages is a _lot_ of work.

Not to be snarky, but the Great Recession didn't give me a lot of confidence in the expertise involved in vetting mortgages.

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

#194

Post by jjtheblunt » Wed, Apr 22, 2020, 5:20 PM UTC

pcurve wrote: post #181

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.

absolutely well said

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

#195

Post by RivieraKid » Wed, Apr 22, 2020, 5:21 PM UTC

CPLX wrote: post #108

RivieraKid wrote: post #99

Earlier quoted context omitted.

I don't think it's a good idea, the government sector is usually less efficient than private sector. It would only make sense if the banking market was not competitive but it's not the case.

> the government sector is usually less efficient than private sector Statements like this require proof.

I don't have a proof, it's a belief based on anecdotal evidence and just thinking about it.

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

#196

Post by jb775 » Wed, Apr 22, 2020, 5:21 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…

Just considering the 2008 bank bailouts, yes they should donate their time and resources. I wish terms like these were clarified prior to releasing the stimulus $.

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

#197

Post by daxorid » Wed, Apr 22, 2020, 5:21 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…

> We don't want money laundering

Can you explain this? It's never made any sense, at all.

1. If you earn excess unreported income, eventually the IRS will figure it out and come get their cut.

2. If you earn it through criminal means, you're already committing a crime for which, if caught, you will be punished.

Why is the act of obfuscating the source of income a crime? Who gets harmed by this, that isn't already harmed by either the potential crime committed or taxes evaded?

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

#198

Post by sailfast » Wed, Apr 22, 2020, 5:24 PM UTC

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…

The bank is taking all of the AML / KYC risk for all of these loans by law, which is costlier / riskier than you’d expect. Further, they’re taking a giant risk that they did paperwork in line with a massive government program that was rolled out extremely quickly without guidance or details.

$10B seems like a pretty low number for this risk plus the cost of servicing the loans over time.

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

#199

Post by chris_va » Wed, Apr 22, 2020, 5:25 PM UTC

Maybe this is an unpopular opinion amidst the pitchforks, but do we not have better things to worry about at the moment?

The system is inefficient and unfair, great lets put it on the list of things to fix, but a ~3% fee is not world ending (unlike some other things) and seems like a low priority.

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

#200

Post by 1123581321 » Wed, Apr 22, 2020, 5:25 PM UTC

alistairSH wrote: post #187

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) f…

I agree those numbers are accurate. If I understand correctly, you intend for $17.5k to be a shockingly high number, but smaller banks already receive percentage origination fees on large loans that cover fixed operation costs and are not overly profitable.