>Some banks care about collecting deposits because the interest they earn on short term paper is more than the interest they pay on deposits. Some banks don't accept deposits at all -- these are called investment banks.
LMFAO. I want to go to Goldman Sachs's Balance sheet and then tell me how much they have in deposits ($394 billion!!!). I want you to go to Morgan Stanley's and tell me the same ($338 billion!!!). Nearly all banks use deposits as an easy source of capital that they then invest/lend out.
You are confusing retail deposits with deposits.
Like sure, there's boutiques like Qatalyst and Allen that limit their deposit base for one reason or another, but they are marginal in scale vs. real investment banks.
>If you want to really understand banks, you should stop talking about deposits, which aren't particularly important, and instead focus on mortgages, which dominate the entire financial industry.
This is such a wild conversation! I am talking about mortgages, which are funded by deposits!
>But they don't need your deposit in order lend someone else money, because they borrow from the capital markets at one rate, and lend at a higher rate, and this has nothing to do with borrowing short term and lending long term. Rather, the primary risk for banks comes from leverage.
Yes we agree! And one form of extremely cheap borrowing is taking deposits! That's why they pay interest on it! It's borrowing! It's a liability on the balance sheet! How is this not clicking for you?!?!?!
LMFAO. I want to go to Goldman Sachs's Balance sheet and then tell me how much they have in deposits ($394 billion!!!). I want you to go to Morgan Stanley's and tell me the same ($338 billion!!!). Nearly all banks use deposits as an easy source of capital that they then invest/lend out.
You are confusing retail deposits with deposits.
Like sure, there's boutiques like Qatalyst and Allen that limit their deposit base for one reason or another, but they are marginal in scale vs. real investment banks.
>If you want to really understand banks, you should stop talking about deposits, which aren't particularly important, and instead focus on mortgages, which dominate the entire financial industry.
This is such a wild conversation! I am talking about mortgages, which are funded by deposits!
>But they don't need your deposit in order lend someone else money, because they borrow from the capital markets at one rate, and lend at a higher rate, and this has nothing to do with borrowing short term and lending long term. Rather, the primary risk for banks comes from leverage.
Yes we agree! And one form of extremely cheap borrowing is taking deposits! That's why they pay interest on it! It's borrowing! It's a liability on the balance sheet! How is this not clicking for you?!?!?!