Not a popular opinion but considering the effort involved, should they not have earned fees? Should they have donated their time and resources? I'm sure it took a monumental effort to pull it together with the lack of clarity being handed down and the volume of loans to process in a short period of time. If the government wanted to do for $0 fees they would have figured out how to do it themselves. If a private business has to do it then they should be paid. If we are complaining about this what about 3M and everyone else making tons of money off of PPE? Obviously it isn't very palatable to hear about others making money off of this kind of thing but we need incentives for people to step up and help.
> That makes it sounds like bank is taking on some form of risk, but they're not.
They did take on some risk -- they need to ensure the loans they make conform to the law passed mere days ago in order to get the government guarantee. Beyond the massive overtime put in by bank lawyers to understand the rapidly passed law, there are apparently ambiguities and contradictions in the law that are not resolved, and losing the guarantee is a huge risk considering how many businesses on the brink are applying for free money. It's not clear where the line between risk premium and profit is, but it's not zero.
The problem is they did a terrible job at it AND took a huge profit for themselves. From what I’ve heard many large banks started denying applicants very shortly after accepting applications - this after forcing many companies to submit paperwork multiple times over errors the bank made itself.
I put in an application immediately with Bank of America. My business is pretty small so our requested loan was about ~$80K. I personally know others who used the same automated system after me and received a loan while I got an email a couple days ago asking me to hope that Congress allocates more money.
The problems are pretty simple. Big banks prioritized big customers, especially those with debt to the banks. If your monthly payroll is $2.5M, are you really a mom and pop shop? Big banks then collected ridiculously high fees for a simpler process than they normally conduct. I'm guessing they literally had a team that estimated the highest fee they could charge without being punished by the government.
That has been almost exactly my experience with Bank of America (though our loan size was a little less).
We submitted our application the day it became available. We received a link to upload documents a few days later. We provided the documentation almost immediately. Other than the automated emails (which threaten delays if you reply) we received a very sketchy call from someone claiming to be a banker with BOA.
To date, we've heard nothing. Whatever they used to prioritize who received funds will probably come out in the class action lawsuit. I look forward to receiving my $18 check.
could they have done it at cost? Yes. Did they need to make a profit off this? Probably not. Are they relatively unaffected (due to prevalance of online banking and also reduced costs due to physical banks being closed)? Yes.
The banking industry is highly affected by the economic conditions that currently obtain. Default rates for all kinds of loans are skyrocketing, and this may just be the beginning of an extended period of turmoil that will rock the balance sheets of banks around the world.
I don’t think they deserve undue sympathy, but they are far from unaffected.
Banks don't make money from "online banking". They make their money from issuing loans. A ton of those loans are going to go into default so banking is going to be hit just as hard as other businesses, it's just going to happen in 3 months instead of today.
Stock price does not tell you how the fundamentals of a business are operating. Especially not in this environment, everyone's stock price is down. Also these are the banks that got a huge bailout from the government a decade ago for failures of their own making.
If a big bank goes under due to coronavirus then I will of course apologize for being wrong, but I doubt that will happen. Too big to fail remember. So we bailed them out now they could be a little more civic minded. And as I said, do it at cost, pay your staff, but don't be thinking about the next dividend payments to shareholders or bonus remuneration to the CEO
OK, not everyones individually, but look at all the major stock exchanges and their value is down. This is a good indicator that the vast majority, and therefore it means that most investors are affected similarly. Are pension funds down? Yes. Are most retail investors down? Yes. Anyone who is up is not up enough to make a difference to the market in general. So dont be disingenous, you know what i meant by 'everyone' in this instance.
it does seem like you choose to pick arguments when people generalise, opting to show how there are examples that go against their point. Even though they may be unique examples that are the opposite to what someone claims but are unrepresentative of reality. This doesn't add to the discussion, in fact it detracts because it devolves into an unnecessary flamewar. HN is not reddit so please dont try and make it like that. I hope you can see how you were being disingenous, regardless it makes me not want to continue the discussion anymore as I dont feel you are engaging honestly and are just trying to score points.
The stock prices of casino companies are also down and I know from friends working for those companies that they are making more money now than before corona. Stock price is down for almost everyone right now.
Regulations to help with small business loans with maximum $amount per transaction. If the total amount then accumulates to $10bn or more, fine nothing to see here.
Currently there are hospitals who are going bankrupt because of they've been forced to stop doing work which pays the bill and instead turn into emergency care providers at war scale.
Retailers have been forced to invested in 2 meter rule things and, perspex everywhere.
Why can't the Banks of all institutions be expected to, you know, give something back? You'd almost think that money is their core business so they always know how to come out ahead.
Just considering the 2008 bank bailouts, yes they should donate their time and resources. I wish terms like these were clarified prior to releasing the stimulus $.
One of my friends is the VP of a community bank with probably somewhere around 60 locations locally. It's completely local; the businesses they work with are the barbershops, car washes, and bakeries we have in our communities. He said it's never been this crazy at the bank, working 18-hour days to make sure everything is processed timely. People automatically think of Wells Fargo, Bank of America, and Chase, but folks need to remember the amount of resources it takes to roll this program out, and that not every participating bank is a behemoth Wall Street too-big-to-fail bank.
Six months ago any company making astronomical profits, charging for their services and marking up products was fine and everyone accepted it.
Now suddenly everyone is questioning if a bank should charge such huge fees, if I should be allowed to markup N-95 masks, etc.
When Nike make a pair of shoes for $4 and sell it for $400 nobody seems to care. By now it's illegal and banned in many places to mark up toilet paper and hand sanitizer.
Not only should we be asking if banks should be making $10B in fees during this time, we should be asking if every company should be doing what they were doing just a few months ago.
