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I have a limited understanding of this but I have read both articles. Playing devils advocate, it's easy to say we have a problem and reference where the proble

I have a limited understanding of this but I have read both articles. Playing devils advocate, it's easy to say we have a problem and reference where the problems have occurred but its harder to present a solution. If we do think they need to stop Banks investing our savings deposits, a couple of questions come to mind, how would the Bank realistically have enough capital to then provide loans if it can't use the funds deposited to balance risk? It could be either they need to stop investing the money being deposited, or banking regulations need to increase the capital that Banks hold outside of their investments. If they're unable to invest the deposits, how would they provide an interest payment for having your funds if everyone's funds are sitting there not making any money through their investments? If we all deposited our money and they couldn't use it to invest or provide loans with interest, how will they afford to pay back interest on your savings deposits? You would have to forgo those. My point being, what does the bank get out of holding our savings if they can't do anything with it? Ultimately I could have a poor understanding and I'm just testing my thoughts.

rawgabbit 1y ago
Used to work for a big bank. They make most of their money charging 10 to 25 interest on credit cards. Banks were profitable when Glass Stegall was in effect. That was passed in the 1930s. https://en.wikipedia.org/wiki/Glass–Steagall_legislation https://en.wikipedia.org/wiki/Glass–Steagall_legislation
financetechbro 1y ago
The article is really vague on its criticism - I think it shows a fundamental lack of understanding of how the finance industry works. Most banks don’t like to hold risk so even when they create these exotic products for institutional clients they typically get sold off to investors who would the risk. Most risk averse banks prefer to be the broker rather than the dealer. Not to say there isn’t anything wrong with the current permutation of banks, but I just don’t think there is a strong argument in TFA. Also credit unions are a thing for those worried about big banks.

rawgabbit 1y ago

Used to work for a big bank. They make most of their money charging 10 to 25 interest on credit cards. Banks were profitable when Glass Stegall was in effect. That was passed in the 1930s. https://en.wikipedia.org/wiki/Glass–Steagall_legislation https://en.wikipedia.org/wiki/Glass–Steagall_legislation

financetechbro 1y ago

The article is really vague on its criticism - I think it shows a fundamental lack of understanding of how the finance industry works. Most banks don’t like to hold risk so even when they create these exotic products for institutional clients they typically get sold off to investors who would the risk. Most risk averse banks prefer to be the broker rather than the dealer. Not to say there isn’t anything wrong with the current permutation of banks, but I just don’t think there is a strong argument in TFA. Also credit unions are a thing for those worried about big banks.