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Nasty Truths About U.S. Fintech

venturebeat.com

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Re: Nasty Truths About U.S. Fintech

#61

Post by baseballmerpeak »

hkmurakami wrote: post #6

That's something that I noticed when looking through Standard Treasury's Series A deck yesterday [1]. Their cost allocation for "Regulatory work" will cost almost $3mm over the next 2 years, pre-lauch . And it looks like they're going to become a bank in the UK rather than in the US. It must have been even more costly to do the work in the US for them. [1] http://www.slideshare.net/linhir/standard-treasury-series-a-.…

Costly and simply not possible with the current regulatory environment (Slide 31 - De Novo Charters)

Re: Nasty Truths About U.S. Fintech

#62

Post by saucetenuto »

reviseddamage wrote: post #60
thinkcomp wrote: post #14

I testified before Congress on this issue. http://www.aarongreenspan.com/writing/20131118.hsgacstatemen... CFPB comment (mostly the same, some exhibits also) here: http://www.thinkcomputer.com/20140214.cfpbcomment.pdf Nothing has changed, and Y Combinator certainly hasn't helped. In fact, they and just about every VC-backed portfolio company have made the situation far worse by convincing legislators that everything…

What is YC's involvement in this? What are you referring to?

I think he means that YC literally has not helped: they haven't made things any worse, but neither have they tried to make things better.

Re: Nasty Truths About U.S. Fintech

#63

Post by techbio »

deet wrote: post #4

The title should be "4 nasty truths about becoming a money transmitter in the U.S." ... FinTech is much larger than just payments and transmission.

Agreed. Or "How We Took On the Impossible and What We Learned From It". I passed on attempting to create a niche credit card a several years ago.

The other posters on this page show the scars--and many possibilities as well.

Re: Nasty Truths About U.S. Fintech

#64

Post by CHY872 »

bsbechtel wrote: post #35
marincounty wrote: post #28

Earlier quoted context omitted.

"So, they'll continue paying politicians to ensure the status quo and collecting all kinds of fees/interest." I'm waiting for a politician to really go after the banks on this his very issue. Yes, we have other problems, but capping/eliminating fees would get my attention. There's only one Elisabeth Warren, and the Bankers are making her out to be out of touch with the way the system works? Could anyone imagine if th…

>> Could anyone imagine if the government let the banks suffocate in 2008? I've heard from multiple sources that Iceland let their banks fail, and they're actually doing better than most now. http://www.washingtonsblog.com/2011/11/key-lesson-from-icela...

That's very different; Iceland's total debt was tiny (compared) as it is a very small island (Iceland's debt was perhaps 1/12 the size of the debt held by Lehman Brothers). Very annoying if you had money stored in Iceland, but otherwise not a huge problem.

The US letting its banks fail would possibly have brought down the entire economy, leading to a far, far more severe crisis. That's what the parent is speculating about.

Re: Nasty Truths About U.S. Fintech

#65

Post by nickpsecurity »

cm2187 wrote: post #24
nickpsecurity wrote: post #17

The article seems to overlook the main obstacle: the banking cartel. The big bankers in the U.S. are among its most powerful lobbyists. The current system benefits them plenty. They like it the way it is. They'll sure push to streamline red tape where possible but a near-zero barrier to entry would eat into their profits. So, they'll continue paying politicians to ensure the status quo and collecting all kinds of fee…

It's rather the excess of regulation due to anti-bank sentiment that creates these barriers to entry. Banks are rather calling for less regulations, and when they got it their way in the 90s, it is what happened. But it is true that the excess of regulation is reenforcing the position of the incumbents. Banks have to staff full time employees just to read the amount of draft regulations and consultation papers publis…

They fight the regulations that eat into their profits and back those that help them. During that same time in 90's, they fought for stronger regulations on credit unions and still do. The also push against the alternative, local currencies because it's less money in their control. Their best ones, though, are in court where they push for low security of ACH and for liability to be on consumer when banks screw up.

Fighting entrenched bankers is one of the hardest uphill battles one can get into. Not so smart.

Re: Nasty Truths About U.S. Fintech

#66

Post by scurvy »

yummyfajitas wrote: post #58
TheOtherHobbes wrote: post #52

Earlier quoted context omitted.

With something like GS regulators would have been able to say "Wait, you're doing lots of securitisation? That's not a good idea, is it?" It's not always the specific regulatory details that matter, so much as the culture they create. As long as GS was taken seriously, the culture remained "If you're a bank, don't do really stupid shit just because you think you can make a quick buck." Once it started being eroded th…

tl;dr; GS wouldn't have done anything, but it might magically change the "culture" and cause regulators to do other unspecified things which would have done something. Um, ok. Also, the main "make a quick buck" bank was Goldman. They did just fine. It was the "make long term safe bets" banks that had problems, e.g. Countrywide, WaMu, Citi. Also, there is nothing inherently wrong with securitization. The underlying pr…

Incorrect. GS and worthy oversight would have nipped most of this in the bud. Just look at what these banks had on their balance sheets at the time, and it would make anyone with a modicum of banking background recoil in horror.

I'm not trying to sound ageist, but judging from the comments on this thread, it appears as if this generation has not learned from 2008 and is bound to repeat the same mistakes. I went through this before with the S&L crisis, one that was largely the fault of lax oversight. We didn't have another blowup until 2008; I guess that was long enough for everyone to forget the early 80's.

Guess it's time to start buying Swiss Francs.

Re: Nasty Truths About U.S. Fintech

#67

Post by nickpsecurity »

bsbechtel wrote: post #35
marincounty wrote: post #28

Earlier quoted context omitted.

"So, they'll continue paying politicians to ensure the status quo and collecting all kinds of fees/interest." I'm waiting for a politician to really go after the banks on this his very issue. Yes, we have other problems, but capping/eliminating fees would get my attention. There's only one Elisabeth Warren, and the Bankers are making her out to be out of touch with the way the system works? Could anyone imagine if th…

>> Could anyone imagine if the government let the banks suffocate in 2008? I've heard from multiple sources that Iceland let their banks fail, and they're actually doing better than most now. http://www.washingtonsblog.com/2011/11/key-lesson-from-icela...

Iceland did a combination of things. They put dirty politicians in jail, got better ones in office, seized the banking system, re-focused it on stable growth rather than greed, and knocked out fraudulent debts with laws. The U.S. could've done quite a bit of that. We could've even pitted Wall St's geniuses against each other by talking the companies and then offering financial incentives to those that help ensure bailout dollars only go to right place.

And so on and so forth. Instead, here's hundreds of billions, don't tell us what you do with it, and criminal immunity. Some kind of "democracy" the U.S. is these days...

Re: Nasty Truths About U.S. Fintech

#68

Post by nickpsecurity »

read-eval-prt wrote: post #21
nickpsecurity wrote: post #17

The article seems to overlook the main obstacle: the banking cartel. The big bankers in the U.S. are among its most powerful lobbyists. The current system benefits them plenty. They like it the way it is. They'll sure push to streamline red tape where possible but a near-zero barrier to entry would eat into their profits. So, they'll continue paying politicians to ensure the status quo and collecting all kinds of fee…

Now that's a conspiracy theory.

Oh, don't believe me that banks pay off politicians. Look at their own records:

http://www.opensecrets.org/lobby/clientsum.php?id=D000000090

Re: Nasty Truths About U.S. Fintech

#70

Post by spacecowboy_lon »

nickpsecurity wrote: post #17

The article seems to overlook the main obstacle: the banking cartel. The big bankers in the U.S. are among its most powerful lobbyists. The current system benefits them plenty. They like it the way it is. They'll sure push to streamline red tape where possible but a near-zero barrier to entry would eat into their profits. So, they'll continue paying politicians to ensure the status quo and collecting all kinds of fee…

The main problem here is the fact that states can regulate banking instead of having one license you need 52.

But that would require a huge reform of the USA's political system which is never going to happen.

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