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Banks are heavily regulated and the government forbids such investments. > The FDIC permits insured state banks and their subsidiaries to undertake only safe a
by leereeves 10y ago
Banks are heavily regulated and the government forbids such investments.
> The FDIC permits insured state banks and their subsidiaries to undertake only safe and sound activities and to make investments that do not present a significant risk to the deposit insurance funds
https://www.fdic.gov/regulations/laws/bankdecisions/InvestActivity/index.html https://www.fdic.gov/regulations/laws/bankdecisions/InvestAc...
- bunderbunder 10y agoThere's still room for innovation and partnerships with startups, though, even if they can't do something wildly disruptive*. For example, I originally found out about CreditKarma because my bank had partnered with them in order to incorporate a credit monitoring widget into their online banking portal.
- jonwachob91 10y agoThey don't have to make risky investments in these companies. They could collect the deposits and provide them to betterment/wealthfront, while they split the fees. The robo-advisors could cut their acquisition team and focus on the algorithms and the small banks could cut their advisor staff. It's basic synergy. It's a risk free method for partnering small banks with innovative companies.