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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

#81

Post by specialist »

alexpetralia wrote: post #13
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.

I could not imagine the amount of financial, operational, technological and regulatory infrastructure that would need to be ported over, however.

Not commercial banks.

Above examples are just passbook (personal) savings and misc services. Super simple.

Though I'd be open minded towards some overlap with credit unions.

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

#82

Post by viklove »

volak wrote: post #71
megous wrote: post #54

Earlier quoted context omitted.

That also means that they could have easily waived the fees without taking much of a hit, just out of solidarity.

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?

So businesses are not a charity, but the US taxpayer is? Why do we keep sending money into the banking system with no strings attached? In 2008 as well as now, banks have collected billions of dollars with no strings attached, and engaged in fraud and corruption with no consequences.

Doctors are not working for free, no, but they also didn't just vacuum up 10B of cash meant for patients either. Only the banking system has the tenacity and lack of shame to do such a thing.

> why should bank employees

I don't think anyone in this thread is talking about bank employees.

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

#83

Post by leothecool »

volak wrote: post #71
megous wrote: post #54

Earlier quoted context omitted.

That also means that they could have easily waived the fees without taking much of a hit, just out of solidarity.

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?

Because banks lobbied congress to have this work put on their plate instead of suggesting something that might be construed as socialism.

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

#84

Post by RubenvanE »

jhwang5 wrote: post #64

Bank charging 2% on this flow is criminal, in the sense that interest rates are nearly negative, so 2% is practically 10, 100X the rates banks can earn otherwise. It's basically free money shoveled into banks, a massive boon.

While I agree that the fee might be high, the comparison between the two is is a false equivalency.[1] A transaction fee is something completely different from an interest fee. The first is a one time fee while the other is continues over time.

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

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

#85

Post by malkuth23 »

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…

My understanding is there is actually some risk. If they do the paperwork wrong, or if the regulations change randomly (which they have a bunch of times already), the bank could theoretically be on the hook. Some of this reportedly happened in the last recession/bailout, so the banks are a bit gun shy.

I am not a banker, so this is all second hand information I have read on r/smallbusiness and other forums while trying to figure out my own stuff.

Don't get me wrong, I think they are getting paid a ton, probably too much, but it is not zero risk.

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

#86

Post by luckylion »

yardie wrote: post #66
Bombthecat wrote: post #28

Earlier quoted context omitted.

Germany did that (post bank) didn't want so well...

Post Bank formed from Deutsche Bank. Which was made infamous for loaning Donald Trump loads of money on highly questionable terms.

No, Post Bank was sold to Deutsche Bank. It was created by the Deutsche Post, who then spun it off, funneled a lot of their branches into it (so you have bank offices that also rent out a desk to the Post) and sold it to Deutsche Bank.

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

#87

Post by wutbrodo »

jhwang5 wrote: post #64

Bank charging 2% on this flow is criminal, in the sense that interest rates are nearly negative, so 2% is practically 10, 100X the rates banks can earn otherwise. It's basically free money shoveled into banks, a massive boon.

Why would annual interest rates be a relevant baseline for a transaction fee?

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

#88

Post by MiroF »

MR4D wrote: post #45
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…

People always seem to miss this key point: The central bank is not a regular bank, it’s a “reserve” bank. Very different function.

My understanding was that GP was suggesting a change in the function of the central bank. Did you have a different interpretation?

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

#89

Post by kube-system »

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? Then if you want to hand out money, you just do it. If you want to borrow money, find a lender.

Except nobody knows if PPP money is a loan or a handout yet. The criteria for determining that is in the future, and central banks are as equally incapable of time travel as anyone else. That's why they're administered as forgivable loans. All PPP money is a loan right now.

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

#90

Post by _curious_ »

drawkbox wrote: post #17
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…

Policy should have sent the money directly to companies from the SBA/IRS, customers then would choose the banks to service that guaranteed government grant/loan essentially. Much like the FAFSA system for student loans, you get your amount, then a servicer handles the actual loan but there is literally no risk to them as it is guaranteed. Why we sent guaranteed money to be held up in banks and did information and cre…

"The 'stimulus' for the economy, routed around the entire actual economy, never reaching individuals or true small business."

How can this be true if innumerable number of individuals received $1200 checks and many small businesses also received varying amounts in the four and five digits?

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