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Well the banking model is to take demand deposits to issue longer term loans. Is that bad? People want loans, people want to deposit cash... Why should banks

by roblev 11y ago

Well the banking model is to take demand deposits to issue longer term loans. Is that bad? People want loans, people want to deposit cash... Why should banks not operate this way? Would it be better not to have deposits and loans?

nostrademons 11y ago
I didn't say anything about good or bad in my post - I'm just commenting about what is. I suspect that you (and probably other readers) are injecting some of the sentiment around the "You're the product, not the customer" meme that surrounds advertising-supported tech companies. I don't think those are bad things either, but a number of other HN readers do. I'm just pointing out that this business model has existed for centuries.
- meric 11y ago
  I'd like to think I'm a supplier to my bank.
  - nostrademons 11y ago
    I think "supplier" would've been a more accurate term when bank accounts actually paid interest. Savings accounts at my bank pay 0.01%; standard CD rates top out at 0.05% for a 1-year. (I do have a high-yield online-only savings account that pays significantly more than that, and feel like I'm much more of a supplier to them, although in some way "supplier" connotes that I'm actively doing work to provide a product or service for them, which I don't feel toward my bank. But the article is about retail banks; the bargain with most retail banks these days is "They give you convenience; you give them money, which they can loan out to make more money." That's much more like the bargain that Internet companies and TV make than the one that say AdSense, App Developers, and Uber make.)
- themartorana 11y ago
  I think there used to be a balanced trade - like exists in many small banks and credit unions now. For holding your money with FDIC insurance and whatnot, the banks got fractional reserve and the right to lend your money at a particular interest rate - which they then shared a small piece of. Now, banks are predatory. They charge you fees for everything (including having a deposit account!!), barely if at all share revenues derived from your money, and routinely flirt with disastrous insolvency, propped up only by the largest government on Earth. That's why people feel like they've gone from customer to Matrix-style energy plant.
  - yuhong 11y ago
    I think it probably started when the banks became less profitable, right?
    - themartorana 11y ago
      Wait... Did that happen? Or was it their need to be always more profitable than before?
      - yuhong 11y ago
        I think the interest rate wars are part of what caused the savings and loans crisis for example.

by roblev 11y ago

nostrademons 11y ago

I didn't say anything about good or bad in my post - I'm just commenting about what is. I suspect that you (and probably other readers) are injecting some of the sentiment around the "You're the product, not the customer" meme that surrounds advertising-supported tech companies. I don't think those are bad things either, but a number of other HN readers do. I'm just pointing out that this business model has existed for centuries.

meric 11y ago
I'd like to think I'm a supplier to my bank.
- nostrademons 11y ago
  I think "supplier" would've been a more accurate term when bank accounts actually paid interest. Savings accounts at my bank pay 0.01%; standard CD rates top out at 0.05% for a 1-year. (I do have a high-yield online-only savings account that pays significantly more than that, and feel like I'm much more of a supplier to them, although in some way "supplier" connotes that I'm actively doing work to provide a product or service for them, which I don't feel toward my bank. But the article is about retail banks; the bargain with most retail banks these days is "They give you convenience; you give them money, which they can loan out to make more money." That's much more like the bargain that Internet companies and TV make than the one that say AdSense, App Developers, and Uber make.)
themartorana 11y ago
I think there used to be a balanced trade - like exists in many small banks and credit unions now. For holding your money with FDIC insurance and whatnot, the banks got fractional reserve and the right to lend your money at a particular interest rate - which they then shared a small piece of. Now, banks are predatory. They charge you fees for everything (including having a deposit account!!), barely if at all share revenues derived from your money, and routinely flirt with disastrous insolvency, propped up only by the largest government on Earth. That's why people feel like they've gone from customer to Matrix-style energy plant.
- yuhong 11y ago
  I think it probably started when the banks became less profitable, right?
  - themartorana 11y ago
    Wait... Did that happen? Or was it their need to be always more profitable than before?
    - yuhong 11y ago
      I think the interest rate wars are part of what caused the savings and loans crisis for example.