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Old Jul 18, 2013, 03:07 PM   #201
G51989
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Originally Posted by gsugolfer View Post
That's the point. The discount rate has been lowered to encourage lending in this much less profitable environment. I'll let you in on a little secret - many more people are defaulting in the last few years.

It's harder than ever for community banks to make money because they're treated in a similar manner to the mega banks.

Increasing the discount rate or increasing regulation does nothing but push community banks out of business and leave it so that your only option is the mega bank that you all hate. Do you really want that?
It gets worse

http://www.theblaze.com/contributions/credit-unions-fight-back-against-big-bank-lobbyists/

There is a huge big bank lobbying movement to force credit unions to basically convert into banks. Which would put lots of them out of business.

They say the non profit community owned and operated credit unions have an " unfair " advantage.

The big banks stole billions of tax payer dollars in bailouts, profit massively off free government loans, and never increasedendjng.

But according to the poor big banks, these community run and owned non profits are the bad guys, riiiight.
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Old Jul 20, 2013, 07:59 AM   #202
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Quote:
Originally Posted by gsugolfer View Post
That's the point. The discount rate has been lowered to encourage lending in this much less profitable environment. I'll let you in on a little secret - many more people are defaulting in the last few years.

It's harder than ever for community banks to make money because they're treated in a similar manner to the mega banks.

Increasing the discount rate or increasing regulation does nothing but push community banks out of business and leave it so that your only option is the mega bank that you all hate. Do you really want that?
Thank you for your kind self to explain it to me this way ...

Seriously though, you are correct about the rate. The problem I have with it, is that that rate is not being given out to you, I, everyone else.

My opinion is that when you buy a house or take a loan, that discount rate should be applied, or very close to (to support the banks business & costs), but not create a creation of wealth out of zero value product. Moreover I think we should not find major gaps between the rate the central banks are lending it out to the banks & the rates applied to the banks' customers.

When you see what happened with a clear lack of oversight, this made a system that is more fragile than ever. Though this might make for some interesting financial analysis, it proves disastrous in a "real" market environment such as the one yourself and I live in.

Truth be told, these community banks you're talking about, I have only seen in the US.
In Europe, and to my knowledge (I can def stand corrected on that), these do not exist. They are either parts of major banking conglomerates or mega banks on their own.

As said in my previous post, my belief is that banks are an intermediary and should be treated this way. Not a central tool to provide money into the markets & the actors of that markets, but a tool overall to provide stability & opportunities for both business & consumers alike.
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Old Jul 20, 2013, 10:17 AM   #203
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If there is no rate premium charged, how does the bank make money? If they can't make money, we revert to the situation I mentioned earlier.
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Old Jul 21, 2013, 07:36 PM   #204
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If there is no rate premium charged, how does the bank make money? If they can't make money, we revert to the situation I mentioned earlier.
Why should the banks get tax payer funded loans?

If they're a private business they should be profitable on their own.
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Old Jul 21, 2013, 07:42 PM   #205
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Why should the banks get tax payer funded loans?

If they're a private business they should be profitable on their own.
If you're referring to discount window borrowing, that's not exactly "taxpayer funded"

If you're referring to bailout money, I agree with you 100%, and it should have never happened.
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Old Jul 23, 2013, 12:30 PM   #206
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If there is no rate premium charged, how does the bank make money? If they can't make money, we revert to the situation I mentioned earlier.
There should be a premium, to run operations & pay its employees. But there shouldn't be massive gaps between the discount rates & the premium given by the banks to its customers.
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Old Jul 23, 2013, 07:05 PM   #207
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There should be a premium, to run operations & pay its employees. But there shouldn't be massive gaps between the discount rates & the premium given by the banks to its customers.
I'm going to go ahead and warn you that this is going to sound facetious, but I promise it's not.

Do you realize that not every bank uses the discount window?
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Old Jul 26, 2013, 04:35 PM   #208
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I'm going to go ahead and warn you that this is going to sound facetious, but I promise it's not.

Do you realize that not every bank uses the discount window?
What else do they use?
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Old Jul 26, 2013, 04:41 PM   #209
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What else do they use?
The vast majority of smaller banks don't even lend up to their total deposit base.
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Old Jul 27, 2013, 04:55 PM   #210
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The vast majority of smaller banks don't even lend up to their total deposit base.
That I'd agree with you, but how about these bigger, conglomerate banks do?

I mean, from a perspective outside the US, it is really hard to advocate for these huge banks.
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