So, you're essentially proposing a weaker, informal version of Basel III. In which case, why have such an exemption in the first place? What innovations does it lead to? Restrictions on banking typically exist for a _really_ good reason. After all, we saw what happened when retail and investment banking were allowed to mingle because it 'lead to [...] innovations'. If you're going to advocate for something beyond saying 'but look, innovation!', you need to be more explicit about what those innovations are, because European banking is plenty innovative within the constraints of Basel III.
And the pace of innovation in US banking was very slow, essentially stalled, for a generation from the consumer's POV
Here in Aotearoa we have ATMs on every street corner since the 1980s. All but the tiniest traders have had pos electronic transactions for nearly thirty years
Other countries are even more advanced (our banks are all like yous now, consumers now viewed as pests)
I want innovation in customer services, but what we get is innovations in financial engineering.
“The exemption for dumping hazardous materials should still be allowed, as it led to great manufacturing innovations for startups.
The exemptees just need to be f**ing careful with this advanced mode of operation.”
This sounds tongue in cheek I know, but SVB’s situation has created real world consequences even for me, someone who has no money tied up with them. My go-to for bonded cellular networks (so i can run a livestream for my employer, a small tech start up) had to tell all of us who use them to pause payments immediately today as this unfolded and are not taking new rentals in the meantime. They’re literally not getting paid right now. This is not a holding pattern that can last long and is highly disruptive for them and, consequentially, me. A video content guy at a small start up on nearly the other side of the country.
Same-day ACH, aka why you now get paid two days earlier than you used to. Check deposits by smartphone camera. Most of the stuff on https://www.bitsaboutmoney.com.
Are these really innovations, or just convoluted workarounds for problems that other countries have actually solved? I don't think anyone under 40 in Europe has ever written a check, for example, because wires are far more convenient there.
Agree. This 40 year old european has seen/used exactly 1 cheque in his life, to buy the house. For some complicated legal reason, houses can not be bought with normal means of payment. We had to walk with the flimsy piece of paper from the bank to the notary, where a bank representative was actually sitting. We gave it to the notary, the notary gave it to the previous owner, and they had to walk it back to their bank. We both felt like stone age caveman, except the previous owners already did it once in the 1980's when they bought the house, so it was the 2nd cheque they saw in their lives.
We asked the banker what would happen if we were robbed. He said he'd just write a new one. The thief couldn't do anything with it, as it was all on name only, and the extremely low daily volume of cheques in use would mean cashing it would stand out like a sore thumb.
There are instant transfers (Zelle, wire transfers, debit cards). There aren't instant transfers with all the same properties as ACH, but later this year there will be.
We have chip-and-nothing, or contactless, which is better than Chip-and-PIN. (Note Apple Pay and similar are basically chip-and-PIN because it's authenticated by the phone passcode.)
> And who still uses cheques these days?!
US uses them for business-to-customer payments, especially unsolicited ones, because we don't want to give random businesses we don't know our bank account numbers.
Those numbers at the bottom of a cheque? Yeah, they include your account number.
There's no inherent information risk to giving out an account number that justifies an outdated paper-based system. Especially when one considers the accompanying fraud risk thereof.
The instant I moved to Europe, I realized just how far behind consumer banking is in the US. It's pitiful.
We can, but sometimes you get payments in the mail from businesses you only have an occasional relationship with.
You can pay people instantly by refunding their debit cards - that's how Uber drivers can get paid - but it's not free, which is why most transfers don't go that way.
We have had check deposits with smart phone cameras for over a decade. I’ve done it with Schwab since college, and while I won’t share my graduation year, it’s been well over a decade lol
And how did that work out for them? Are many of the people who were using SVB yesterday happy about their decision today? If they could go back in time and give up whatever that innovation was, and not be praying that they still have their money next week, are you saying most of them would be happy where they are? The problem here is that the system just isn't transparent enough: you put your money in a bank and I guess you just have to assume that they are really really smart or you lose your money... people make fun of crypto here constantly, but at least there everything is an open book. At the end of the day, the situation with SVB is actually worse than some scary DeFi protocol.
The system is sufficient transparent. SVB was a publicly traded company. Customers who cared about risk could just read the reports. In the end any bank can fail.
The FDIC insurance won’t make the rest whole, the bankruptcy process will. The assets are not fundamentally toxic and someone will buy them, with a haircut.
SVB was a normal bank. They specifically targeted tech industry startups through relationships with VCs and founders, but there was nothing special about the banking side.
nonsense - what banking innovations do startups need? is there really any such thing as a startup? or are we just talking about small businesses some of which grow into larger still unprofitable businesses? hopefully this mythologizing stops
I was wondering the same. You put money in a bank so no one robs you and steals it. Money goes in and money comes out when you need it. What innovation is there?