Comment by Retric
9 years ago
Credit Cards are an example of non bank loans.
The difference is people fronting money for loans would need to take on real risks without FDIC protection or have safe deposits but need to pay for bank services.
9 years ago
Credit Cards are an example of non bank loans.
The difference is people fronting money for loans would need to take on real risks without FDIC protection or have safe deposits but need to pay for bank services.
You know that the large majority of credit card loans are given out by banks, right? https://www.nilsonreport.com/upload/TopIssuersofUSGPCC.3.jpg
Sure, but like GM's finance division making car loans; Credit Cards are a viable business even without access to depositors.
Often the capital for many bank issued credit cards does not come from depositors at all.
Ok, so we don’t let banks loan money. I guess they may still take deposits but if they are not going to pay any interest people will keep accounts as low as possible.
On the other hand, all the financing needs will be covered by other means. These “non-banks” will have to obtain capital as equity and debt, maybe even loans from other non-banks, but certainly not as deposits.
What was the problem that we where trying to fix anyway?
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