Hacker News Reader

Deposits aren’t free. We will use round numbers. If I take $100B in deposits and pay .5% interest, that’s an expense of $500M per year and including overhead even when rates were 0, deposits at a bank cost more than 0.5%.

So I need to lend it out so I can make the spread and I’m not just bleeding it money

View on HN

Deposits don't need to have interest paid. It's entirely possible for the money to simply sit there and not be invested in anything.

Four questions - where does a bank store cash? What is the IORB and what are its underlying assumptions? What is the overhead cost in banking? What is the cost of ACH and a wire? I don’t contend you can just have money sit there. I also don’t contend that it was stupid in hindsight to be this levered to duration. But there is an overhead cost in banking.

Reply on news.ycombinator.com