dagblog - Comments for "The Trouble with Banks"

There is only one US bank -

EmmaZahn — Thu, 17 Nov 2011 23:56:43 +0000

There is only one US bank - FDIC.

The others are parasites. Okay, maybe some are symbiotes. But without FDIC, how many of them would you entrust with your money? Isn't that the primary function of a bank?

They can look at my file and

Oxy Mora — Thu, 17 Nov 2011 19:47:26 +0000

In reply to Hey, they call me "maggot!" I

They can look at my file and realize I aint gonna do twenty! I have all my stuff there and get a little frustrated with the phone option system. But what service!. Yesterday I updated my homeowners' coverage and did everything on the phone in about 10 minutes.

Great analysis, Genghis. I

Michael Maiello — Thu, 17 Nov 2011 18:46:35 +0000

In reply to The Trouble with Banks

Great analysis, Genghis. I do all of my financial stuff through Chase. Checking, savings, credit card. I have no dealings with any other bank, and I like it that way because there's one place to go whenever there's a problem with something. I rarely need to go to a branch but when I do, I am pretty much never helped at the teller window. I might start there, but before long I'm sitting at some one's desk and being asked if I want coffee or water.

"It's just that my credit card was declined this morning and I want to make sure it was the store's system and there's nothing wrong with it," I say.

And the friendly Chase employee verified that my card is fine.

So why am I sitting there? With coffee?

Oh, since I'm here, did I know that Chase offers another card that charges a slightly higher interest rate but offers more reward points.

Oh, I don't want that. I want to keep my low rate.

Oh, okay. Well, we just wanted you to know about it.

Of course, a teller could have swiped the card and verified there was no problem in 2 seconds. But then who's going to give me coffee, treat me like a big shot and persuade me to exchange my lower rate card for a higher rate card?

Of course branches are profitable, just for the reasons you say.

Modern retail banks profit by

DF — Thu, 17 Nov 2011 18:35:00 +0000

In reply to The Trouble with Banks

Modern retail banks profit by creating American money and lending it to Americans at interest. Now, first of all, if you can't figure out how to make money with that business model, then I would suggest retiring from finance.

Second of all, this would seem to be an appropriate moment (or really any moment for the last three years) to question why this arrangement exists. I have argued previously that the fundamental reason for doing this is because we believe in the positive outcomes of multiple private institutions competing in a market place. However, we have seen some decidedly negative outcomes from these markets as of late. Does it not behoove us then to ask whether the wisdom of the present arrangement still stands?

Ultimately, America can and should regulate these institutions in any way we see fit. No industry should be allowed the privilege of creating sovereign money and charging interest on it while the American people accept full responsibility for the losses created by those private institutions. Three years later, that's still where we are.

And I'm supposed to feel bad for giant retail banks because they can't make out like they did before their bubble burst?

EDIT: To push the point just a bit more after re-reading this para:

But hold on a minute. Why does it cost $200 to $300 to maintain a checking account, especially now that so much is done electronically? By way of explanation, the Times mentions only FDIC insurance premiums and the cost of staffing branches. But FDIC premiums are just over a dime per $100 of deposits. If a customer deposits $1,000, it costs the bank about a buck.

So they receive a $1,000 deposit and pay $1 to insure it for the privilege of lending out $900 of that deposit at retail interest rates, with the American taxpayer promising to backstop all such insured deposits in the case of a bank run. Again, I'm not sure how it's possible not to profit from this arrangement unless you're simply incapable of conducting due diligence in making loans. Of course, when you don't have to worry about holding those loans, but can instead slice them up and sell them to the next sucker, well...

Hey, they call me "maggot!" I

Donal — Thu, 17 Nov 2011 17:31:44 +0000

In reply to I love it when USAA addresses

Hey, they call me "maggot!" I have to drop and give twenty for every withdrawal.

I love it when USAA addresses

Oxy Mora — Thu, 17 Nov 2011 17:10:20 +0000

In reply to The cheaper banks without so

I love it when USAA addresses me as "Lieutenant". I mean, where can you get respect like that? "What can I do for you this morning, Lieutenant?" You just cannot buy that kind of respect anywhere today. I call USAA at least once a week. It's like when I was stationed in Yokosuka, Japan. The dental technicians on the naval base were really cute. I used to make an appointment every week, until the Admin office picked up on it and restricted my appointments to once a quarter. About that time CINCPACFLEET's daughter arrived in Japan on a vacation from college......yes, I've been with USAA for a very long time.

This short essay is pretty

Richard Day — Thu, 17 Nov 2011 16:47:24 +0000

In reply to The Trouble with Banks

This short essay is pretty damn interesting.

I mean what is more boring than banking and yet what institutions are really as powerful as our banking institutions.

And as you point out; how exactly should these 'costs' be broken down without being simply more propaganda fodder to suit these banking blaggarts?

Good.

You almost have me interested enough to do some more reading on this elusive subject.

We should all leave the

Wattree — Thu, 17 Nov 2011 16:34:27 +0000

In reply to I have USAA as well. And also

We should all leave the majors just to teach them who's running things - and we should do the same with the incumbents in congress as well. Money only has value in politics if it can be used to buy our votes.

I have USAA as well. And also

Michael Wolraich — Thu, 17 Nov 2011 05:13:24 +0000

In reply to The cheaper banks without so

I have USAA as well. And also Citibank. So far, Citi hasn't charged me anything. If they do, I'll dump 'em.

One of my siblings uses USAA

Donal — Thu, 17 Nov 2011 03:00:32 +0000

In reply to The cheaper banks without so

One of my siblings uses USAA now, and I'm switching over at the end of the year.