More bouncing
Over at http://www.billingsnews.blogspot.com/, David Crisp picked up on the bad-check-writer signs I noted on November 18 (see "Bounced," below). And it's led to some interesting discussions on his comments board. When somebody asked about profitability, one commenter said, "Having worked at a smallish bank, I know that overdraft fees typically brought in as much as $40,000/month."
But another took me to task over this quote: "A check, after all, represents a bank's promised substitute for cash". He wrote: "This is balderdash. The only time a bank stands behind a check is when it is a certified check (where they withdraw the funds at the time the certified check is written), otherwise they are solely a "financial intermediary" between two parties. (If it were otherwise, commercial commerce would come to a screetchin' halt.)"
I must say I disagree: Of course a bank is "solely a financial intermediary." So are credit cards. So is cash. My point is that when banks pass the risks of that intermediation on to innocent parties, people are going to eventually choose other intermediaries. That's why the government cracks down so hard on counterfeiters (not tacking on extra charges to those who RECEIVE counterfeit) -- because counterfeit erodes the promise inherent in cash.
And that leads me to two questions. 1) Is some bank going to try to do better, or do these huge profits come from monopolistic practices? 2) When we talk about economic development in Montana, are we willing to make hard choices between supporting Montana small businesses and the politically connected nationwide businesses that can cut into their profitability? You can make good philosophical arguments for either choice, but I personally would rather not have my tax dollars go to prop up the Wells Fargo bank.
What do YOU think? Drop a line to info@johnclaytonbooks.com. To receive these posts via email, write to johnclaytonoutreach-subscribe@yahoogroups.com. (You need not put any text in the message.)
But another took me to task over this quote: "A check, after all, represents a bank's promised substitute for cash". He wrote: "This is balderdash. The only time a bank stands behind a check is when it is a certified check (where they withdraw the funds at the time the certified check is written), otherwise they are solely a "financial intermediary" between two parties. (If it were otherwise, commercial commerce would come to a screetchin' halt.)"
I must say I disagree: Of course a bank is "solely a financial intermediary." So are credit cards. So is cash. My point is that when banks pass the risks of that intermediation on to innocent parties, people are going to eventually choose other intermediaries. That's why the government cracks down so hard on counterfeiters (not tacking on extra charges to those who RECEIVE counterfeit) -- because counterfeit erodes the promise inherent in cash.
And that leads me to two questions. 1) Is some bank going to try to do better, or do these huge profits come from monopolistic practices? 2) When we talk about economic development in Montana, are we willing to make hard choices between supporting Montana small businesses and the politically connected nationwide businesses that can cut into their profitability? You can make good philosophical arguments for either choice, but I personally would rather not have my tax dollars go to prop up the Wells Fargo bank.
What do YOU think? Drop a line to info@johnclaytonbooks.com. To receive these posts via email, write to johnclaytonoutreach-subscribe@yahoogroups.com. (You need not put any text in the message.)
