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The Economy

Discussion in 'Sports and News' started by TigerVols, May 14, 2020.

  1. The Big Ragu

    The Big Ragu Moderator Staff Member

    What literally was happening. ... VC firms were telling their companies to get their money the hell out of SVB. ... and they were all calling trying to do wire transfers and were being told it would be a few days.

    So they started lining up outside of branches.

    After hours long waits, some were able to get cashier checks, which they then had to race over to other banks where they had accounts and try to deposit. Some of those banks weren't accepting those cashier checks. I heard one person saying that they wouldn't accept the deposit for the business account, but they let him deposit it to his personal account, and then he had to move the money to his business account.
     
  2. Michael_ Gee

    Michael_ Gee Well-Known Member

    There are many more customers of SVB in Greater Boston than I imagined (physical branch is located in Wellesley, which figures) not because of tech industry monkey-see-monkey-do but because it bought Boston Private, a bank here which had many professional small business customers, law firms, doctors' practices, like that, as well as tech customers. In a classic Boston sequence, one of the customers got to the SVB branch at 5:45 am, then put up a folding chair to mark his place as first in line (people put chairs in street parking spaces they've shoveled to hold them) and went off to Dunkin'. He got his dough and left well satisfied.
     
    wicked likes this.
  3. Hermes

    Hermes Well-Known Member

    “STANFORD! Get your ass in here! Did you crash the economy?”
     
    Azrael likes this.
  4. Azrael

    Azrael Well-Known Member

    Eject-1200_480.jpg
     
  5. The Big Ragu

    The Big Ragu Moderator Staff Member

  6. BTExpress

    BTExpress Well-Known Member

    Worked for Southwest Airlines. :)
     
    HanSenSE, dixiehack and Michael_ Gee like this.
  7. Azrael

    Azrael Well-Known Member

  8. dixiehack

    dixiehack Well-Known Member

  9. I Should Coco

    I Should Coco Well-Known Member

    One more local comment I’ll mention here.

    A local bank CEO who serves on some Fed regional council said, regarding next week Federal Reserve Board meeting, “The Fed’s job is to control inflation, not prevent a recession.”

    Hmmm … seems to me that federal economic regulators should be concerned about both?
     
  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    Their mandate under the Federal Reserve Act is "stable prices (i.e. -- inflation) and maximum employment (which would weigh on recession)."

    So you are kind of right.

    In reality, they have as much ability to fulfill that mandate as a monkey has to dribble a football. And they are so bad at it, that they just steer us from financial crisis to financial crisis, because their "tools" only allow them to create economic distortions that give sugar highs in the present, but create huge costs later on.
     
  11. Azrael

    Azrael Well-Known Member

    This is pretty thorough, I think.

    Why Poverty Persists in America

    According to the F.D.I.C., one in 19 U.S. households had no bank account in 2019, amounting to more than seven million families. Compared with white families, Black and Hispanic families were nearly five times as likely to lack a bank account. Where there is exclusion, there is exploitation. Unbanked Americans have created a market, and thousands of check-cashing outlets now serve that market. Check-cashing stores generally charge from 1 to 10 percent of the total, depending on the type of check. That means that a worker who is paid $10 an hour and takes a $1,000 check to a check-cashing outlet will pay $10 to $100 just to receive the money he has earned, effectively losing one to 10 hours of work. (For many, this is preferable to the less-predictable exploitation by traditional banks, with their automatic overdraft fees. It’s the devil you know.) In 2020, Americans spent $1.6 billion just to cash checks. If the poor had a costless way to access their own money, over a billion dollars would have remained in their pockets during the pandemic-induced recession.

    Poverty can mean missed payments, which can ruin your credit. But just as troublesome as bad credit is having no credit score at all, which is the case for 26 million adults in the United States. Another 19 million possess a credit history too thin or outdated to be scored. Having no credit (or bad credit) can prevent you from securing an apartment, buying insurance and even landing a job, as employers are increasingly relying on credit checks during the hiring process. And when the inevitable happens — when you lose hours at work or when the car refuses to start — the payday-loan industry steps in.

    For most of American history, regulators prohibited lending institutions from charging exorbitant interest on loans. Because of these limits, banks kept interest rates between 6 and 12 percent and didn’t do much business with the poor, who in a pinch took their valuables to the pawnbroker or the loan shark. But the deregulation of the banking sector in the 1980s ushered the money changers back into the temple by removing strict usury limits. Interest rates soon reached 300 percent, then 500 percent, then 700 percent. Suddenly, some people were very interested in starting businesses that lent to the poor. In recent years, 17 states have brought back strong usury limits, capping interest rates and effectively prohibiting payday lending. But the trade thrives in most places. The annual percentage rate for a two-week $300 loan can reach 460 percent in California, 516 percent in Wisconsin and 664 percent in Texas.

    Roughly a third of all payday loans are now issued online, and almost half of borrowers who have taken out online loans have had lenders overdraw their bank accounts. The average borrower stays indebted for five months, paying $520 in fees to borrow $375. Keeping people indebted is, of course, the ideal outcome for the payday lender. It’s how they turn a $15 profit into a $150 one. Payday lenders do not charge high fees because lending to the poor is risky — even after multiple extensions, most borrowers pay up. Lenders extort because they can.

    Every year: almost $11 billion in overdraft fees, $1.6 billion in check-cashing fees and up to $8.2 billion in payday-loan fees. That’s more than $55 million in fees collected predominantly from low-income Americans each day — not even counting the annual revenue collected by pawnshops and title loan services and rent-to-own schemes. When James Baldwin remarked in 1961 how “extremely expensive it is to be poor,” he couldn’t have imagined these receipts.
     
    Last edited: Mar 14, 2023
    Dog8Cats and I Should Coco like this.
  12. I Should Coco

    I Should Coco Well-Known Member

    "Like" is not really how I feel about your post, Azrael. Wish we had a "sad but true" button.

    And your clip from the article doesn't mention another evil snake in the predatory lending department, the title loan shop. Use your car title as collateral, pay triple-digit interest ... and lose your vehicle if you miss a payment.
     
    Last edited: Mar 14, 2023
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