Hacker News

points by cowsandmilk 1 day ago | 0 comments

I don’t know of any bank that hides the fact they lend out money. Most pretty actively advertise it.

Technically true I suppose. But go ask the average person on the street where the bank gets the money they lend people for mortgages and cars and such and I guarantee you the number of people that make that connection is going to be much much smaller than you seem to want to suggest.

[–] drdec 1 day ago

It doesn't actually work the way it's portrayed in It's a Wonderful Life. The banks don't use depositor money to make loans. I suspect you will think what they actually do is even worse. Look into fractional reserve banking.

[–] tharkun__ 1 day ago

Never seen that movie but did watch a documentary ages ago about fractional reserve banking yes.

The bank still uses the deposit money in that system. You are right to point out those same people on the street I mentioned would freak out even more if they knew that banks essentially lend out more than we deposited and also that they might sell your debt and all that jazz (I bet most people either never understood what happened in 2008 or forgot already other than a vague "yeah mortgage crisis")

[–] Betelbuddy 1 day ago

>> I don’t know of any bank that hides the fact they lend out money.

Absolutely true. They question here is how many announce they are borrowing from you :-)

[–] BobaFloutist 1 day ago

Why else would they be paying us interest for the privilege of providing us with banking services? I know that the real answer is because the government tells them they have to (do both, provide banking services and pay interest) because we've decided it's a social good to provide people with savings accounts and incentivize them to use them, but anyone that knows that knows how banks work.

Why do people who don't know how banks work think they get paid interest on their savings?

[–] parineum 1 day ago

This is like those articles that say, "[entity] quietly [doing totally normal thing]" to frame it like it's some devious thing.

That's what banks do. It's not a secret. Any cursory understanding of banking gives you that information.