The brilliant thing for the banks is that a person could have $10 million in one of their transaction accounts, pay the $4 monthly fee, and earn absolutely zero interest. Check the interest rates for say CBA's smart access account for example.
Now, you can make the argument that it'd be silly to leave $10 million in one of those accounts, but I'd suspect it's also not very ethical of a bank to not pay interest on such a large amount when no doubt they're using these funds to expand their balance sheet and profitability.
The brilliant thing for the banks is that a person could have $10 million in one of their transaction accounts, pay the $4 monthly fee, and earn absolutely zero interest. Check the interest rates for say CBA's smart access account for example.
.
If you had $10 Million cash, and you needed to keep in in cash for a few weeks for some reason, would you just keep it at home or would you put it in the bank as fast as you could fearing it may be stolen?
If you admit that you would want to bank it as fast as you can for fear of theft, you are admitting that the bank is offering you a good service, which even in the absence of earned interest has value to you.
I will exit the conversation here we are just going round in circles, But as I have said, a bank offering a safe place to store cash is a benefit in its self, and thats all most depositors really deserve, inflation hedging is about all that should be expected, only when you lock into a term deposit.
An honest question here.
If you had $10 Million cash, and you needed to keep in in cash for a few weeks for some reason, would you just keep it at home or would you put it in the bank as fast as you could fearing it may be stolen?
If you admit that you would want to bank it as fast as you can for fear of theft, you are admitting that the bank is offering you a good service, which even in the absence of earned interest has value to you.
If they didn't try to lend it to someone without my approval it might be a good deal.
?
Dude, they're not "offering a safe place" for depositors money; they're using people's money to make money.
Is the bank just keeping my $10M safe or are they using it to make outrageous amount of profit on?
I have a valuable car with no place to store it. If someone offers me a secure storage space I may pay them for that space. If they want to hire my car out to people I don't know who may use it as a race car for all I know, for a good sum of money then I want a proportion of that money.
Make sense ?
No, absolute nonsense. Your valuable car is unique and is possibly not replaceable. If they lend your car out to others, apart from the potential to be damaged, it will be subject to wear and tear. So what they return to you is not what you gave the person originally.
The actual answer is - I don't really think I'd have a choice. No one is handing me over $10 million of bank notes, the person giving me the cash, or the bank!If you had $10 Million cash, and you needed to keep in in cash for a few weeks for some reason, would you just keep it at home or would you put it in the bank as fast as you could fearing it may be stolen?
It's the same principle. The money belongs to the depositors, it's lent to whoever the bank wants to lend it to, and they pay a return for the use of the money.
It's not just storage as VC was implying.
If the bank were to fail, depositors have no direct claim against money the bank lends others and there is no linkage between money you lend to the bank and money the bank lends to others. When you deposit money, you become a creditor of the bank and in the event of the bank failing, you only have recourse to whatever funds are available when all other creditors that are before you in the pecking order have been satisfied.
These [ATM transactions] cost the bank a lot to process and the interest rate reflects that
Well you had better talk to VC about that.
He was going on about everybody else losing all their money before the depositors lose a cent.
One of you apparently has the wrong end of the stick.
If you are correct, then the depositors deserve a damn sight better return on their money than they are getting now to cope with the higher risk.
That's why the banks charge EFTPOS fees so they are double dipping aren't they ?
I can't see why you are thrashing about so much on this point. In reality what risk are you talking about? What banks have failed in Australia and if there were any (I can't recall), did depositors lose money?
Do we need politicians? Since John Howard ended his stint as PM we have had (rabble) governments from both sides who have done nothing but waste our money.
A primary school class would/could have done a better job. What a waste to have all these people with their outlandish salaries and perks (often abused) drawing from the taxes we all work so hard to generate.
Unfortunately this pathetic situation is set to continue for at least another 8 years.
Abolish all politicians I say!
“Oh, the humanity!”
That's exactly the point I made to VC when he was going on about how much risk shareholders take and why they deserve a higher return.
You can't have it both ways.
The point is, regardless of how much risk you think exists, share holders are the first to absorb it.
The point is, regardless of how much risk you think exists, share holders are the first to absorb it.
And it doesn't have to mean a bank failure, a bank only fails if share holders capital is wiped out.
Shareholders could lose 10% or 20% or 90% of their equity without the bank failing.
If you think the share holders position isn't risky, then there is no way you can say the depositors position is, because what ever risk the depositors have, the share holders have 10 times more, its the nature of the structure.
Every loan that bank makes, puts share holders equity at risk, if someone doesn't pay their loan back, that comes out of shareholders pockets, not depositors.
"Are you living in the real world?"
Key points:
That was one question asked by an exasperated Matt Thistlethwaite, deputy chair of the House of Representatives' standing committee on economics, to NAB chief executive Andrew Thorburn yesterday.
- Since 2009, 55 financial planners have left NAB because of poor conduct
- An ongoing investigation suggests many still received significant bonus payouts
- NAB boss Andrew Thorburn admits some cases were handled poorly
Mr Thorburn was responding to questions about the bank's financial planning arm and its practices, including how National Australia Bank (NAB) executives paid bonuses despite breaching codes of conduct.
He said an internal review found more than 1,100 staff members failed to meet the bank's code of conduct in the last financial year. In the 2016 financial year, that number was 1,138.
Fifty-five financial planners have left the bank since 2009 because of poor conduct.
"The consequences for those people ranged from a formal warning, through to dismissal," Mr Thornburn said.
"It also involves a reduction or elimination of any bonus. Of the 1,138, there were five senior managers. Two were dismissed and three faced other disciplinary action."
More at
http://www.abc.net.au/news/2017-03-03/nab-andrew-thorburn-house-standing-committee-economics/8321186
If shareholders don't like those risk, which tend to come with good rewards, then don't make those risk.
If they decided to take on those risk, then wear it. Profits they keep, losses they bear. Capitalism 101 right?
Why must the bank's risk be at the expense of depositors?
And it is at depositor's expense because they're getting zero real return for their cash.
What's with this head I win, tail you lose business? That's capitalism now is it?
So if the bank goes broke and depositors' money are lose, the gov't will guarantee and taxpayers will pay it off for the bank.
If that guarantee isn't there, how much do you reckon depositors would demand on their deposits to compensate for that risk? Nothing?
So taxpayers are paying for an insurance policy that might, might not, but might come due one day. That's great because the bank won't use it anyway...?
Then depositors ought to pay the bank for taking risk. Banking is a risky business, according to the bank, so the reduce that risk, depositors ought to pay for it by earning diddly. That's fair?
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