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This is literally the opposite of how banks work. If they keep everyone's money they would never be able to make loans, let alone fractional reserve leveraged l

This is literally the opposite of how banks work. If they keep everyone's money they would never be able to make loans, let alone fractional reserve leveraged loans. They need you to keep your money in an account and not need to access it that often, or at least keep most of the money there.

faeriechangling 4y ago
I guess what the bank needed and what the customers needed were fundamentally at odds then. There was a run on USD coin due to this fiasco, it didn't have enough liquidity to pay all its customers, and yet people stopped their run on the asset because people figured that there was no way they weren't going to get something like 90+ cents on the dollar within 3 months so it was pointless to sell beyond that point, and because it became pointless to sell beyond that point it meant that the value was probably going to approach $1 so people pumped the price back up. When I look at something like that, I really wonder if it's really so structurally impossible to make a bank where nobody has an incentive to do a run on you in anything but the most extreme of cases.
za3faran 4y ago
Maybe they should change their business model then if they need predatory loans to survive.
- dagw 4y ago
  First of all, what about SVBs loan business do you consider "predatory"? The alternative business model would to charge customers to hold their deposits. I somehow doubt that would be very popular either.
  - za3faran 4y ago
    Any usurious transaction is predatory by definition. Of course people don't want to talk about it. Someone submitted the wikipedia article about usury to HN about 12 hours ago but it got flagged apparently.
    - dagw 4y ago
      So you think banks should instead charge you to hold deposits? Would you use such a bank, if they promised to never engage in 'usury'?
      - za3faran 4y ago
        Yes that's one possibility. Furthermore, there are ways to make money that are not usurious.
        cjtrowbridge 4y ago
        Why don't you go try to start something like that and tell us how your ideas work out in real life.

faeriechangling 4y ago

I guess what the bank needed and what the customers needed were fundamentally at odds then. There was a run on USD coin due to this fiasco, it didn't have enough liquidity to pay all its customers, and yet people stopped their run on the asset because people figured that there was no way they weren't going to get something like 90+ cents on the dollar within 3 months so it was pointless to sell beyond that point, and because it became pointless to sell beyond that point it meant that the value was probably going to approach $1 so people pumped the price back up. When I look at something like that, I really wonder if it's really so structurally impossible to make a bank where nobody has an incentive to do a run on you in anything but the most extreme of cases.

za3faran 4y ago

Maybe they should change their business model then if they need predatory loans to survive.

dagw 4y ago
First of all, what about SVBs loan business do you consider "predatory"? The alternative business model would to charge customers to hold their deposits. I somehow doubt that would be very popular either.
- za3faran 4y ago
  Any usurious transaction is predatory by definition. Of course people don't want to talk about it. Someone submitted the wikipedia article about usury to HN about 12 hours ago but it got flagged apparently.
  - dagw 4y ago
    So you think banks should instead charge you to hold deposits? Would you use such a bank, if they promised to never engage in 'usury'?
    - za3faran 4y ago
      Yes that's one possibility. Furthermore, there are ways to make money that are not usurious.
      - cjtrowbridge 4y ago
        Why don't you go try to start something like that and tell us how your ideas work out in real life.