The Times They Are A-Changin’
I recently went to see Bob Dylan on his Rough and Rowdy tour. Sadly, he didn’t play the old songs such as “Times”. He’s changed.
A lot of my career was spent in banking. I always thought that banks would be needed. Having money or wanting money doesn’t go out of style. Now I think that may have changed.
TABASFUNDING used to be one of the few non-bank small business lenders. Now there are hundreds of lenders, internet based, offering business loans.
Middle market companies, those with $10 million-$1billion in annual sales used to have only banks as lending sources. Now, non- bank sources provide significant credit through private equity funded entities.
Credit card processing has been a profit center for banks. That 1, 2, or 3% fee for clearing credit card payments has been strong for many years. Non-banks now are pressing to get into it.
Payment systems such as Zelle, Apple Pay, Venmo, and PayPal are prospering. True, most of the investors in non-bank financial companies are big banks. JP Morgan Chase and other smart bankers have seen the writing on the wall and invested in “fintechs”.
You recall that Silicon Valley Bank and several other large banks folded following the rapid rise in interest rates in 2023? Regulators propose raising capital requirements on banks as a way of providing more of a cushion against future failure. Sure, more capital is safer, but the math is that in order to earn the same shareholder return, banks will need to get more aggressive with their lending and investing. I find this proposal to be self-defeating.
Then we have the current banking news. The Biden administration wants to control bank overdraft fees. No one likes paying fees, but with all the alternatives today, if someone doesn’t like the fees their bank charges, they can find another bank or non-bank that charges less. Should the government tell banks or other businesses what to charge their customers? The banking industry is loaded with rules and regulations, many of which make the industry safer, but also some which make banks more expensive to operate without more safety.
I recall an old-time banker saying that on a sunny day, they could keep the lights off to save money and recycle paper clips and rubber bands. That wouldn’t help much these days.
It is important that banks disclose their fees, but after that, it should be up to the customer.
Airlines used to be restricted by the FAA as to how much or little they could charge for fares, but that changed in 1978 under President Jimmy Carter. The restrictions were lifted. This resulted in stiff competition and drove fares down. I don’t hear interest in returning to airline price regulation these days.
Top performing stocks are the tech companies, not banks. They’re lightly regulated compared to banking, operate on much larger profit margins. There needs to be the right mix of regulation so that Banks, large and small will be around for the future.
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TABASFUNDING provides funds in the form of loans from $50,000-$750,000 to entrepreneurs who want to expand or acquire businesses. We will look at other business situations which require capital, effort, management, and patience. It will take a while to find out who the winners are in the current environment. If you think you have one, and need funding, please contact me directly at 610-896-2400 or Lee@TABASFUNDING.com.
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LEE TABAS is available as a Director, Trustee, and Consultant. With 30+ years of business, entrepreneurship and banking experience, Lee can be helpful with ideas, policies and second opinions. Available for short-term or permanent assignments. Please call 610-896-2400 or email Lee@TABASFUNDING.com for further information.