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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

#261

Post by jariel »

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 you described is 'retail current accounts' which make up a tiny portion of what 'banking' is.

Also, the Fed doesn't 'give out money' really.

If the Government wants to 'give out money' it can write a cheque - or - use some kind of IBN/SWIFT style coding to direct deposit.

The government needs: better identity management so you can 'login' an 'prove' who you are, where you live. And banks need better routing/transfer.

FYI there is 'paperwork' and 'process' involved in doling out money, it might have been better not to use the banks.

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

#262

Post by heartbreak »

triceratops wrote: post #255
erikig wrote: post #50

Some quick numbers: - 10bn in Fees - 4975 Lenders - $2m per Lender I think this number doesn't seem unreasonable given the fact that the banks themselves are businesses - they have employees, training, technology, risks etc.

Is it a ton of extra work for them (the banks) though? With the way things are banks are no longer doing much of other things they normally would - business loans, mortgages, auto loans etc. This program would merely occupy those otherwise-would-be-idle employees' time. And the banks aren't loaning out their own money either, so where's the risk?

> Is it a ton of extra work for them though?

Anyone who attempted to obtain a PPP loan from their local bank knows that yes, it was a ton of extra work for them.

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

#263

Post by volak »

triceratops wrote: post #253
volak wrote: post #71

Earlier quoted context omitted.

Businesses are not a charity - according to reported Q1 earnings last week they're losing million of dollars everyday just keeping the lights on. They've lost far more even with the fees they collected from this program. As someone said above - doctors are not working for free, why should bank employees?

> doctors are not working for free, why should bank employees? Are rank-and-file bank employees getting a big chunk of those increased earnings? Seems like both doctors and bank employees are simply continuing to earn their regular paychecks, as they should. It's the banks' shareholders that are making way more money for basically zero risk. And execs, who get paid mostly in stock. That's the problem here.

But as I pointed out in the original post - the 10B in fees is in line with revenue the banks receive during normal times. And going off the earnings the banks posted last week, they are losing millions every day just keeping the lights on.

There is no increased earnings there is in fact very big losses. Which is another thing people tend to forget when discussing exec pay. The execs take a hit when business is bad, but the majority of employees continue getting paid.

Exec pay is high but you can't forget that much of the risk / responsibility should the business do poorly is on their heads not the majority of the workforce.

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

#264

Post by thephyber »

grecy wrote: post #176
alexpetralia wrote: post #13

Earlier quoted context omitted.

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?

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

"Incapable" assumes lots of things, but practically speaking the number of things that we (the USA) "are capable of doing" is shrinking and using GDP/Person is an interesting way to illustrate the point.

We are overpaying for services that other countries have managed to solve for reasonable costs. University tuition, healthcare, building infrastructure are all ridiculously expensive in the USA, so our higher GDP/Person is largely wasted compared to most other OECD countries. Our government and the crooked ethical guidelines of our companies/organizations are why this overpricing started and continues to exist.

For those tasks which require regulatory/legal changes, the USA is swimming in peanut butter. What we "are capable of doing" largely has to do with our Legislature+Executive branches ability to find ways to make productive changes (rare) without sabotaging those same efforts (even rarer). But half of those people are rowing in one direction (team red) and the other half in another (team blue). The USA's primary policy tool is "make the most visible spectacle of brinksmanship" and has been for 10+ years.

The people/companies in the USA are capable of feature parity with just about any other country's people/companies, but that assumes that our government either doesn't get in the way or their government doesn't assist them.

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

#265

Post by jermaustin1 »

onetimemanytime wrote: post #191
Saaster wrote: post #159

Earlier quoted context omitted.

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

The IRS already has the information that the banks are asking for.

For companies with employees, that is IRS Forms 940 and 941.

For Sole Props that is your IRS Form 1040 and Schedule-C.

The IRS likely has the banking information for your company (or your payroll processor) and if they don't they have your business address, and could cut checks like they do EVERY YEAR.

Claiming that a bank has to be there to process the paperwork is just plain ignorant of the amount of information the IRS already requires from companies on a quarterly and yearly basis.

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

#266

Post by thephyber »

theplague42 wrote: post #6
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…

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.

The USPS used to run limited banking services[1] in the 20th century. It was largely obsolete by the 1960s (according to the Wiki article).

It's also important to note that the USPS is required to be self-sufficient in its purse strings, but is heavily restricted in what markets it can/can't be in by Congress. I think the "privatize everything" crowd of legislators/lobbyists see the USPS in banking as an existential threat to private banks profit margins and it won't happen without a political black swan (maybe not even in the current black swan environment).

[1] https://en.wikipedia.org/wiki/United_States_Postal_Savings_S...

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

#267

Post by burmer »

eezurr wrote: post #48
solarhoma wrote: post #32

Earlier quoted context omitted.

Yes but these fees are huge with larger loans. Why are the fees percent based rather then flat rate? The banks giving out these loans are not taking on any risk with the loan. So how are they getting away with large fees associated with the loans?

Because successful fraud takes everything.

If the money is to mitigate risk, then why can't the fee be (mostly) refundable? The bank takes on the risk of processing some enormous transaction and takes a percentages of the transaction as insurance in case of fraud. Then after a period of time with no issues, the money flows back, less some nominal amount for the actual work involved processing the transaction.

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

#268

Post by A4ET8a8uTh0 »

I will admit that I am mildly aggravated by the roll out of CARES act for several different reasons. This is just a topping on the cake really. Yesterday, my wife told me that her doctor's office is furloughing 7 people ( not her, but I am sure next move will include her too ) so I do get a little sour when I find out that companies with built-in access to financing ( publicly traded companies ) got approximately surprisingly high chunk of those funds(1). Needless to say, I am not unbiased, because of this.

It is however a little aggravating and a little reminiscent of 2008, where well connected get rescued, where the rest is left to fend for themselves. That is a recipe for pitchforks.

1. https://www.marketwatch.com/story/here-are-the-public-compan...

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

#269

Post by viklove »

volak wrote: post #249
viklove wrote: post #238

Earlier quoted context omitted.

It's not a "logical error," it's an "ideological error," at least from your perspective. Banks are not parents, and small businesses are not "dependent children," so I'd say you're making a bigger logical fallacy called a false equivalence. > Do you qualify for a larger helping hand than the 25 year old who lives alone? No, because the "helping hand" you're getting is not helping the "children" eat in this situation.…

His post is not addressing this issue of bank fees hes making a wider point about bailouts in general. I am simply reminding him that airline companies who did nothing wrong have people depending on them for their paychecks. Exactly the same as a child depends on their parent. And in this case the money given to AIRLINES helps a lot of parents feed their children

...just give them money directly to those parents instead. When you give money to the airlines, those airlines like handing out bonuses to their execs, and initiating stock buybacks with the confidence that they'll get bailed out in case hard times hit. Airlines are not parents, and they are not invested in their employees wellbeing. It's a false equivalency because an employer-employee relation is nothing like a parent-child relation.

> airline companies who did nothing wrong

Airline companies did do something wrong. They didn't prepare for this situation when they had cash reserves, instead they initiated buybacks to enrich board members and executives. Greed should not be rewarded, wisdom and caution should.

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

#270

Post by MiroF »

_curious_ wrote: post #257
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.

"Most theories of the good hold that you are certainly entitled to things just for being born - take your life for instance." Where can more information be found about "theories of the good"? What about this thing we call money - how much are we entitled to and from who? Can anyone explain what the benefit is of living an existence feeling entitled to something tangible such as money?

Sure, you can examine moral and political philosophy. Nozick has some writing about it, Rawls does, Mill, etc. - it's a whole branch of thought.

The benefit of shaping society in a way that you think is good is that you end up with a better society.

I don't really think you're discussing in good faith, so I'll end it here - but I think this is a very interesting line of discussion.

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