In essence, bank accounts are somewhat pointless in the modern age. Banks are all required to provide the same service (more or less) and waste a shitton of money to make it happen and be regulated for it.
Obviously getting rid of consumer bank accounts overnight would be a fiscal catastrophe, so they’re going to phase them out to ease the blow.
So presumably the banks would have offered accounts that were as close as they could be to current accounts while still counting as savings accounts according to the regulators. The impact of the law would have depended on exactly how similar the regulations allow these saving accounts to be to current accounts.
I suspect most people would have moved their money to "savings" accounts and things would continue as before.
If anything I think it would go in the opposite direction, freeing people to do things on their own time, and not the banks'. Available when when people need them to be, not when the institutions want to be, but that would require effort on their part and maybe cost them a few basis points in profit.
Maybe people should have the option to save their money in a bank that doesn't loan out their savings at all? Does such a thing exist? I would be willing to pay a flat monthly fee to keep my money in a bank and use their services in lieu of receiving their paltry interest on my savings account, in exchange for the knowledge that they actually have my money. I know this system of massive loan-to-deposit ratios is conducive to economic growth, nevertheless I get the impression we're all being scammed on a fundamental level by the banking system at large- and any suggestion of meaningful change is always dismissed as if this house of cards is just the way things have to be, and always has been
Banks couldn't pull this. They're regulated and insured. Investment banks less so, but plain old banks holding your checking and savings -- not a chance.
...at first blush, I like this line of thinking, but I wonder what the side effects would be. If banks make it much harder to open accounts, that might hurt poorer folks the most, and perpetuate inequality.
Or simply for death. Not my idea, I first thought it was a joke when they told me, but it makes perfect sense. I get exactly zero interest for my savings, not even to compensate inflation. It's stock options or bs funds.
Only useful service I get is cards and avoiding keeping cash in a physical safe. Credit comes from cards or specialized loan companies.
There are two services that do matter: mortgages and credit lines for companies. I can see how this kind of volume operations could be also be done by specialized companies so generalistic banks could disappear.
Banks don’t really exist to help people save money anymore. For the most part, they exist to extract fees from people who keep money there and from borrowers.
To be honest, I don't know what the business model would be, but it seems like it should be in the banks long-term best interest to create rich, prosperous people with invest-able funds. They are literally in a position to create their own wealthy customer base.
What would it actually do for a big bank, if it were the exception rather than the rule, that their low/middle-class account holders had enough savings to cover several months of expenses and small/medium emergencies without relying on credit, had a reasonable portfolio of retirement investments, and on their way to being in a financial position to get involved with other kinds of investments, eventually?
The banks could automate all the best practices of personal finance for most their account holders, to make all of the above happen for their average customer. Software is cool like that.
- They could divert a percentage of all deposits to emergency funds by default.
- They could set aside money for expenses, based on your cash-flow history by default.
- They could set aside spending money, also based on your cash-flow history by default.
- They could manage a persons credit debt (think pay minimums while savings/cushion is built, then use the extra cash flow from savings goals into debt payments).
- If the customer dip into savings because your car broke down or something - starting filling up the emergency fund again.
- If credit debt is paid up, savings goals are hit, they could start automatically put portions of savings into low risk long term investments (IRA's etc).
(Simple.com does some of the above kind-of but its a manual process - but quite nice compared to what 21st century online banking has been, so far)
And I'm sure there's much much more - and for the people who do really well, then they can funnel those people into more customized investment approaches. Are market forces so screwy, that all this would actually be bad for the banks bottom line, in the long run?
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