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Genuinely curious, if our banks only received interest from the Fed: 1. How are loans originated? If they can only deposit at the Fed, how is anyone supposed t
by maxbond 3y ago
Genuinely curious, if our banks only received interest from the Fed:
1. How are loans originated? If they can only deposit at the Fed, how is anyone supposed to get a mortgage?
2. What value does the bank provide at that point? Why wouldn't the Fed just give people bank accounts?
- toomuchtodo 3y ago1. Bond issuance and securitization, as happens today for most mortgages. The existing capital markets, broadly speaking. 2. Exactly [1]. Similarly to airlines, it’s a utility masquerading as a business. Everyone gets a demand deposit account, no fees, and instant payment functionality. Everyone else in the ecosystem is then either a lender or some sort of value add financial services provider. Good questions! [1] https://www.congress.gov/bill/116th-congress/senate-bill/3571 https://www.congress.gov/bill/116th-congress/senate-bill/357...
- toomuchtodo 3y agoIt appears Matt Levine covers #1 in much more depth than I in a recent money stuff piece. https://www.bloomberg.com/opinion/articles/2023-05-11/blackstone-can-be-the-bank https://www.bloomberg.com/opinion/articles/2023-05-11/blacks... | https://archive.is/SrzgL https://archive.is/SrzgL