Comments on: Economics Question http://www.pointedstick.net/colter/2009/02/24/1033/ the further adventures of the luckiest bastard you ever saw Tue, 27 Jul 2010 00:25:10 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: colter http://www.pointedstick.net/colter/2009/02/24/1033/comment-page-1/#comment-38534 colter Mon, 02 Mar 2009 03:57:30 +0000 http://www.pointedstick.net/colter/?p=1033#comment-38534 Thanks, Keath. I never realized that loans were such a big part of a bank's business model. I just thought it was something else they did. Debit and checking fees make more sense to me, in terms of fiscal responsibility. Loans are so much riskier, but as I've learned from this month's issue of Wired, risk is its own magical calculated concept that every quantitative analyst on Wall Street has vastly misunderstood up until now. Thanks, Keath. I never realized that loans were such a big part of a bank’s business model. I just thought it was something else they did. Debit and checking fees make more sense to me, in terms of fiscal responsibility. Loans are so much riskier, but as I’ve learned from this month’s issue of Wired, risk is its own magical calculated concept that every quantitative analyst on Wall Street has vastly misunderstood up until now.

]]> By: Brandon http://www.pointedstick.net/colter/2009/02/24/1033/comment-page-1/#comment-38512 Brandon Sun, 01 Mar 2009 02:10:47 +0000 http://www.pointedstick.net/colter/?p=1033#comment-38512 Squirrel's Club with Chester the Investor! Ahh ... good memories! Squirrel’s Club with Chester the Investor! Ahh … good memories!

]]> By: Keath http://www.pointedstick.net/colter/2009/02/24/1033/comment-page-1/#comment-38344 Keath Wed, 25 Feb 2009 14:18:43 +0000 http://www.pointedstick.net/colter/?p=1033#comment-38344 They take the money you deposit and lend it out to someone else, charging them interest on it. When the someone else pays it back, plus interest, they give you a cut of the interest and keep a cut for themselves. Banks try to minimize risk, which is why a lot of people have so much trouble getting loans - if they default on the loan and can't pay it back, the bank has to pay for your cut out of their own pocket, which they're loathe to do. Banks also make a significant chunk of money from overdraft fees and other assorted charges. A local BofA told me recently that with the economic downturn, the money a bank makes everytime you use a check card has turned into their #1 revenue stream. They take the money you deposit and lend it out to someone else, charging them interest on it. When the someone else pays it back, plus interest, they give you a cut of the interest and keep a cut for themselves.

Banks try to minimize risk, which is why a lot of people have so much trouble getting loans – if they default on the loan and can’t pay it back, the bank has to pay for your cut out of their own pocket, which they’re loathe to do.

Banks also make a significant chunk of money from overdraft fees and other assorted charges.

A local BofA told me recently that with the economic downturn, the money a bank makes everytime you use a check card has turned into their #1 revenue stream.

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