3 ms·

St00pid question : I don't understand what kind of accounts these start-ups have. Are they like the mandatory checking accounts for the day-to-day management ?

St00pid question : I don't understand what kind of accounts these start-ups have. Are they like the mandatory checking accounts for the day-to-day management ? That should indeed be bailed out immediately, to unfreeze their processes. Or is that investment? I don't care if investors loose money for once. And how can a bank 'loose' money from checking accounts, without anyone profiteering or getting the money for friends ? Banks shouldn't be supposed to invest with checking accounts. They should just hold the book, and charge you a yearly fee if they need.

peteforde 4y ago
Not a stupid question. Good to ask what you don't know. Yes, we're talking about startups with their operating capital frozen and struggling. Many of the commenters here appear to be confusing bank depositors with bank investors. If you started a startup, it's very likely that your funds would be frozen. > And how can a bank 'loose' money from checking accounts As usual, it's complicated. Banks have always used the money in checking accounts to make investments. All of the service fees are just a tiny fraction of how a bank makes money. The real question is how - and to what degree - a bank should be able to invest that money without creating untenable risk. Essentially, they are allowed to loan a significant multiple of their actual cash holdings. Let's say that they can loan $5 for every $1 in trust. This works great so long as they don't have 21% of their customers show up and demand their holdings at the same time... which is a drastically simplified version of what happened late last week. Unfortunately, they don't teach this stuff in high school. They 100% should.
- JohnFen 4y ago
  > Unfortunately, they don't teach this stuff in high school. They sure did when I was in high school. When did that change?
  - peteforde 4y ago
    I'm impressed. I went to high school in the 90s in Canada, at a shop/tech focused school. There's lots of things I think are super important (business, ethics, communications, financial literacy, civics, things like cooking and cleaning that used to be called "home ec") that were simply not on the menu for us. Sure, there might be the occasional teacher who could spend a few minutes on a good question, but it was not part of any curriculum, so far as I could tell.

peteforde 4y ago

Not a stupid question. Good to ask what you don't know. Yes, we're talking about startups with their operating capital frozen and struggling. Many of the commenters here appear to be confusing bank depositors with bank investors. If you started a startup, it's very likely that your funds would be frozen. > And how can a bank 'loose' money from checking accounts As usual, it's complicated. Banks have always used the money in checking accounts to make investments. All of the service fees are just a tiny fraction of how a bank makes money. The real question is how - and to what degree - a bank should be able to invest that money without creating untenable risk. Essentially, they are allowed to loan a significant multiple of their actual cash holdings. Let's say that they can loan $5 for every $1 in trust. This works great so long as they don't have 21% of their customers show up and demand their holdings at the same time... which is a drastically simplified version of what happened late last week. Unfortunately, they don't teach this stuff in high school. They 100% should.

JohnFen 4y ago
> Unfortunately, they don't teach this stuff in high school. They sure did when I was in high school. When did that change?
- peteforde 4y ago
  I'm impressed. I went to high school in the 90s in Canada, at a shop/tech focused school. There's lots of things I think are super important (business, ethics, communications, financial literacy, civics, things like cooking and cleaning that used to be called "home ec") that were simply not on the menu for us. Sure, there might be the occasional teacher who could spend a few minutes on a good question, but it was not part of any curriculum, so far as I could tell.