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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

#271

Post by triceratops »

heartbreak wrote: post #262
triceratops wrote: post #255

Earlier quoted context omitted.

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.

For the bank or the applicants? And was it on top of work that the bank was already doing? Because as I argued, many of the bank's normal functions were effectively turned off so it's not extra work for the bank. It replaces the other work they'd be doing.

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

#272

Post by danesparza »

rapind wrote: post #77
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…

Instead of all the fuckery, imagine if the government just sent everyone a monthly cheque with the only criteria that they are a living breathing adult with a US address. Universal trickle up.

When you believe that all humans will act in an honest and moral way, this is certainly the solution that appears to work best. Full disclosure: I'm with you, I think this is probably what will need to be seriously considered in the future.

Counter argument: Won't this just encourage fuckery from the citizenry? Won't they just be encouraged to game the system (have more kids, take care of people to intercept their checks, etc)?

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

#273

Post by danesparza »

dependenttypes wrote: post #46
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…

Right now as things are Banks are just leeches offering minimal value to the world yet receiving a lot of income.

This is a very one-sided and unsupported (I don't see links to articles) argument. You can do better.

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

#274

Post by triceratops »

volak wrote: post #263
triceratops wrote: post #253

Earlier quoted context omitted.

> 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,…

> you can't forget that much of the risk / responsibility should the business do poorly is on their heads

The worst outcome for any employee, exec or lowly serf, is the loss of their job. But it's far more devastating for a rank-and-filer to lose their job than for a highly-paid exec to lose theirs. So...no the majority of the workforce also takes on most of the risk should the business do poorly.

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

#275

Post by volak »

viklove wrote: post #269
volak wrote: post #249

Earlier quoted context omitted.

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 p…

You are assuming this deal is the same as previous ones. Its not even close

https://www.marketwatch.com/story/united-airlines-details-it...

Grants for employee salaries and benefits like health insurance, low interest loan to be paid back, and a stake in the company in the form of equity. And all with strings attached so they can't hand out bonuses or lobby congress.

Businesses operate on revenue and margin and companies like airlines can't justify using even 1% of its revenue to "save" for rainy days. Their tickets have to be as cheap as possible and they have to market to as many people as possible. Its unreasonable to ask them to lay out millions on the chance an act of god rolls through.

As a company they have plenty of ways to raise capital to weather major events, including selling stock, which is what they are doing - to the government in exchange for favorable loans and a grant.

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

#276

Post by leetcrew »

daxorid wrote: post #197
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 har…

regarding 1), the point of money laundering is that you can report that income to the IRS without clearly implicating yourself in criminal activity. laundering your money and then not reporting it defeats the purpose.

there's nothing inherently wrong with obfuscating a source of income, although it's hard to do this without committing some sort of fraud along the way. it's a (somewhat distasteful, imo) administrative convenience. people who run criminal enterprises have a variety of methods for distancing themselves from the actual crimes they are making money from. it turns out to be a lot easier to catch them doing funny stuff with money than it is to pin any of the original crimes on them.

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

#277

Post by volak »

triceratops wrote: post #274
volak wrote: post #263

Earlier quoted context omitted.

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,…

> you can't forget that much of the risk / responsibility should the business do poorly is on their heads The worst outcome for any employee, exec or lowly serf, is the loss of their job. But it's far more devastating for a rank-and-filer to lose their job than for a highly-paid exec to lose theirs. So...no the majority of the workforce also takes on most of the risk should the business do poorly.

Not true actually. The majority of employees do not get fired. Only a minority do

And the minority that is let go get 3-6 months of severance and unemployment benefits until they inevitably find a new job - which btw is far easier to do when you are not an executive of a floundering business.

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

#278

Post by dylan604 »

javagram wrote: post #242
bcx wrote: post #237

I'd like to see a version of this article and headline that figures out the effort required by the banks to administer a program like this. Quick read looks like 2.8% off the top, for 0 risk (10/349). Total businesses receiving loans was 1.6M ( https://www.pymnts.com/loans/2020/sba-lenders-approval-ppp-l... ) Average money a bank made per loan was 10,000,000,000/1,600,000 (assuming all banks made an equal distributio…

FWIW, the banks didn’t feel like it was 0 risk, many of them were doing a lot of due diligence, document checking, etc. because they were worried about it. I’ve seen stories of small business owners talking about how difficult it was to get the loan through due to having to go back and forth with documents etc. although I’m sure it varied per bank. 2.8% doesn’t seem like that much for me, especially considering the g…

Why did it need to be a bank to begin with? Are banks involved when the government hands out low interest loans for natural disasters. Do they take cuts from that money? If so, I've never heard of it before. What about the 9/11 fund? Did banks get a cut of that money as well? Why is this situation different?

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

#279

Post by notJim »

user5994461 wrote: post #18
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.

Are you talking about the US post office? The post office in France already offer banking. It's mandated by law as a public service and they can't reject customers. It doesn't offer the more complex products or investments though, it ain't their purpose. Not sure about the UK post office. Seem to offer a lot of banking services and cards, but it says it doesn't do current accounts anymore.

> they can't reject customers

This would be a huge thing in the US, where poor people cannot get bank accounts, and end up needing to use predatory paycheck cashing providers who take huge fees instead.

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

#280

Post by [deleted] »

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…

[deleted]
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