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

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

#201

Post by celticninja » Wed, Apr 22, 2020, 5:26 PM UTC

dtwest wrote: post #182

celticninja wrote: post #141

Earlier quoted context omitted.

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.

Stock price does not tell you how the fundamentals of a business are operating. Especially not in this environment, everyone's stock price is down. Also these are the banks that got a huge bailout from the government a decade ago for failures of their own making.

If a big bank goes under due to coronavirus then I will of course apologize for being wrong, but I doubt that will happen. Too big to fail remember. So we bailed them out now they could be a little more civic minded. And as I said, do it at cost, pay your staff, but don't be thinking about the next dividend payments to shareholders or bonus remuneration to the CEO

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

#202

Post by ianhawes » Wed, Apr 22, 2020, 5:26 PM UTC

dumbfoundded wrote: post #186

tmpz22 wrote: post #177

Earlier quoted context omitted.

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…

That has been almost exactly my experience with Bank of America (though our loan size was a little less).

We submitted our application the day it became available. We received a link to upload documents a few days later. We provided the documentation almost immediately. Other than the automated emails (which threaten delays if you reply) we received a very sketchy call from someone claiming to be a banker with BOA.

To date, we've heard nothing. Whatever they used to prioritize who received funds will probably come out in the class action lawsuit. I look forward to receiving my $18 check.

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

#203

Post by jldugger » Wed, Apr 22, 2020, 5:27 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.

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

They did take on some risk -- they need to ensure the loans they make conform to the law passed mere days ago in order to get the government guarantee. Beyond the massive overtime put in by bank lawyers to understand the rapidly passed law, there are apparently ambiguities and contradictions in the law that are not resolved, and losing the guarantee is a huge risk considering how many businesses on the brink are applying for free money. It's not clear where the line between risk premium and profit is, but it's not zero.

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

#204

Post by jeltz » Wed, Apr 22, 2020, 5:29 PM UTC

dtwest wrote: post #182

celticninja wrote: post #141

Earlier quoted context omitted.

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.

The stock prices of casino companies are also down and I know from friends working for those companies that they are making more money now than before corona. Stock price is down for almost everyone right now.

That said this crisis should have hit banks.

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

#205

Post by cm2187 » Wed, Apr 22, 2020, 5:32 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…

I believe it is not taking any credit risk but it is still taking a fraud risk and I assume still needs to meet its KYC obligations. Plus the documentation and operational needs.

Anyone who works in the financial industry knows that client onboarding is painful.

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

#206

Post by Talanes » Wed, Apr 22, 2020, 5:33 PM UTC

allendoerfer wrote: post #59

pstrateman wrote: post #35

Earlier quoted context omitted.

What went wrong?

Nothing. It got privatized and is currently owned by Deutsche Bank.

It's not nothing if it was privatized. Either something went wrong to drive privatization, or nothing was going wrong to begin with and then privatization was what went wrong.

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

#207

Post by marcosdumay » Wed, Apr 22, 2020, 5:33 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?

> 5-10 million small businesses

Seems quite a small number, and easy to do from the tax-collecting databases.

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

#208

Post by naringas » Wed, Apr 22, 2020, 5:34 PM UTC

JSavageOne wrote: post #172

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.

and which nowdays is probably done by a computer system without any paper being involved

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

#209

Post by jermaustin1 » Wed, Apr 22, 2020, 5:34 PM UTC

Milner08 wrote: post #75

dboreham wrote: post #63

Earlier quoted context omitted.

The UK Post Office did offer banking. Not sure if it survived Thatcher..

They offer some things now (deposits, travel cards, etc), but I am not sure they offer actual accounts anymore.

According to their website, they still offer almost everything a traditional bank does. Including personal loans, and mortgages [1].

1: https://www.postoffice.co.uk/money

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

#210

Post by sailfast » Wed, Apr 22, 2020, 5:36 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…

I’m guessing you’ll end up re-inventing the banking system if you follow this down enough of the complex rabbit holes required here.

What do you think a lender is? Why do you think they can lend money?