4 ms·

And also "people with bank accounts who don't make enough to pay taxes" like my grandma.

by muzz 4y ago

Godel_unicode 4y ago
Yeah, the fees and lower interest rates from this will be pretty brutal for the poor. Not using tax dollars is actually pretty regressive.
- notfromhere 4y ago
  Most people get so little interest from their accounts that it is basically immaterial
- piyh 4y ago
  They only need to cover 20 billion or so for SVB? In the grand scheme of all banks, that's not a ton. SVB wasn't some FTX oops it's all gone level fraud. Assuming it's a one time charge and not a contagion, it sounds like why we have government and FDIC.
  - muzz 4y ago
    $20 Billion is roughly $60 for every person in the country It's more the state government budget for about 1/3 of the states in the union
    - piyh 4y ago
      128 billion in the FDIC reserves as of December 2022. Better than letting more dominoes fall if you're trying to preserve that insurance pool.
- davidgay 4y ago
  > Yeah, the fees and lower interest rates from this will be pretty brutal for the poor. I'm fairly sure the poor aren't that affected by interest rates - the very definition of being poor is not owning much in the way of assets that could earn interest...
  - ashwagary 4y ago
    It's not only the earned interest on savings being discussed here, the OP was also including higher interest rates on the variable rate loans that most poorer borrowers qualify for.
- op00to 4y ago
  5 basis points was the last special assessment in 2009. Would you seriously notice a 0.05% lower rate of return on your account?
ericd 4y ago
Normal/poor people don't put enough money into banks for it to represent much of their earnings. IIRC, from that image that was circulating around, much less than half of the deposits of even BofA are from accounts <$250k. So I don't think accounts like your grandma's are going to bear any percentage of the brunt of this.
- pooper 4y ago
  > Normal/poor people don't put enough money into banks for it to represent much of their earnings. This is hurtful in more ways than one. Banks routinely charge all kinds of fees from account maintenance to whatever Wells Fargo did for years. Retail banks won't let the Federal Reserve open a bank account for everyone by default with the Fed. Either what you say is true and the retail customers are insignificant, and banks must offer no fee accounts. If not, they can't block federal reserve from creating default USD accounts for everyone. Or they are an important part of the bank's marketing strategy or whatever. In this case, banks must lose the ability to gamble customer funds. Which one is it?
  - rocqua 4y ago
    > Retail banks won't let the Federal Reserve open a bank account for everyone by default with the Fed. Actually the FED is opposed to this themselves. A company called the narrow bank was going to try this. The FED refused them a banking license, all the way to court. The FED wants deposits reinvested into the economy.
    - afiori 4y ago
      Quoting from: https://www.econlib.org/why-does-the-fed-oppose-narrow-banking/ https://www.econlib.org/why-does-the-fed-oppose-narrow-banki... > A narrow bank takes deposits and invests the money in interest-bearing reserves deposited at the Fed. Because that’s all these banks would do, they would be very low cost and hence could pass along to depositors the interest earned on reserves, minus a small fee. > Narrow banks could attract many large depositors, who currently receive much lower interest rates on their deposits at ordinary commercial banks. It feels like they were offloading their cost to a service that the government maybe offers at a loss.

And also "people with bank accounts who don't make enough to pay taxes" like my grandma.

by muzz 4y ago

And also "people with bank accounts who don't make enough to pay taxes" like my grandma.

Yeah, the fees and lower interest rates from this will be pretty brutal for the poor. Not using tax dollars is actually pretty regressive.

notfromhere 4y ago
Most people get so little interest from their accounts that it is basically immaterial
piyh 4y ago
They only need to cover 20 billion or so for SVB? In the grand scheme of all banks, that's not a ton. SVB wasn't some FTX oops it's all gone level fraud. Assuming it's a one time charge and not a contagion, it sounds like why we have government and FDIC.
- muzz 4y ago
  $20 Billion is roughly $60 for every person in the country It's more the state government budget for about 1/3 of the states in the union
  - piyh 4y ago
    128 billion in the FDIC reserves as of December 2022. Better than letting more dominoes fall if you're trying to preserve that insurance pool.
davidgay 4y ago
> Yeah, the fees and lower interest rates from this will be pretty brutal for the poor. I'm fairly sure the poor aren't that affected by interest rates - the very definition of being poor is not owning much in the way of assets that could earn interest...
- ashwagary 4y ago
  It's not only the earned interest on savings being discussed here, the OP was also including higher interest rates on the variable rate loans that most poorer borrowers qualify for.
op00to 4y ago
5 basis points was the last special assessment in 2009. Would you seriously notice a 0.05% lower rate of return on your account?

ericd 4y ago

Normal/poor people don't put enough money into banks for it to represent much of their earnings. IIRC, from that image that was circulating around, much less than half of the deposits of even BofA are from accounts <$250k. So I don't think accounts like your grandma's are going to bear any percentage of the brunt of this.

pooper 4y ago
> Normal/poor people don't put enough money into banks for it to represent much of their earnings. This is hurtful in more ways than one. Banks routinely charge all kinds of fees from account maintenance to whatever Wells Fargo did for years. Retail banks won't let the Federal Reserve open a bank account for everyone by default with the Fed. Either what you say is true and the retail customers are insignificant, and banks must offer no fee accounts. If not, they can't block federal reserve from creating default USD accounts for everyone. Or they are an important part of the bank's marketing strategy or whatever. In this case, banks must lose the ability to gamble customer funds. Which one is it?
- rocqua 4y ago
  > Retail banks won't let the Federal Reserve open a bank account for everyone by default with the Fed. Actually the FED is opposed to this themselves. A company called the narrow bank was going to try this. The FED refused them a banking license, all the way to court. The FED wants deposits reinvested into the economy.
  - afiori 4y ago
    Quoting from: https://www.econlib.org/why-does-the-fed-oppose-narrow-banking/ https://www.econlib.org/why-does-the-fed-oppose-narrow-banki... > A narrow bank takes deposits and invests the money in interest-bearing reserves deposited at the Fed. Because that’s all these banks would do, they would be very low cost and hence could pass along to depositors the interest earned on reserves, minus a small fee. > Narrow banks could attract many large depositors, who currently receive much lower interest rates on their deposits at ordinary commercial banks. It feels like they were offloading their cost to a service that the government maybe offers at a loss.