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Comment by SilverBirch | Hacker News Reader

This is quite funny right, people get scared of FR so they pull their money at and run to daddy (JPM) who then proceeds to take that money and... put $5Bn uninsured into FR. What I really don't understand though, is that not only is this a level of co-ordination any normal industry would be barred from doing, haven't we essentially moved to a point where any reasonably large bank is now being gauranteed because we're so scared of contagion? Doesn't this basically make Banking a utility? There's massively limited downside to running a bank now. Given that there's now a capped downside to banking, wouldn't it be logical at this point to cap upside? 100% taxation over some level of profits - since the obvious answer to a capped downside is to up your risk to increase profit?

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> This is quite funny right, people get scared of FR so they pull their money at and run to daddy (JPM) who then proceeds to take that money and... put $5Bn uninsured into FR.

A $5B loss won't collapse JPM, so this works OK. (And it wouldn't be anywhere near $5B, either; they'd get a significant portion back even in the event of a FRB collapse.)

> is that not only is this a level of co-ordination any normal industry would be barred from doing

This seems the opposite of anti-competitive behavior that gets cartels/conspiracies in trouble.

Arguably basic transactional banking with payment rails should be a utility, but the US shut its postal banking system and people are paranoid about CBDCs.

As for the coordination, it's the mirror image of people telling each other to get their money out of SVB.

When the Fed finally gets FedNow fully up (July this year), basic transactional banking with rails will be a utility.

The equivalent of Mark Cuban is doing about basic pharmaceuticals in California will be able to be done for banking services.

Payroll services will be able to be instant, as well as bill paying.

That $5b is definitely "insured" - the FDIC has all but nationalized US Bank deposits so long as there's widespread liquidity issues under its "systemic risk exception."

Banking should be managed on the level of essential community elements such as legislation, governance and perhaps military, serving the society. Not a playground for competing profit chasing self focused reckless parties. So the rest of the economy could have a more reliable platform for free competition.

I would enjoy seeing how paranoid HN would get at the US State Military People's Banking Corporation.

Banking in the US is a public-private partnership and has been for over a hundred years. There are no secrets there, for anyone paying attention.

I’m curious how you can say there’s no downside a week out of a large bank’s shareholders going completely bust.

There's downside for shareholders, but not for the employees running the bank. As for the top executives, they may get pain when the bank fails, but payouts for top executives are genreally disproportionately in the good years. So a few good years of high yields are probably a financial incentive that overwhelms the risk of eventual ruin.

Coordination in industries is not legal, especially when its transparent like this. Not sure why you would think it was illegal.

Coordination between businesses isn't illegal unless it is for the purpose of removing competition or fixing prices, and this action clearly isn't either of these.

Hard to argue with your point that banking is basically a utility now b/c of the government guarantees point, though.

How is this not for the purposes of fixing prices? Isn't the intent here to prevent the competitor bank from needing to sell their assets and driving down prices, leading to contagion?

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