These are a few things I view as chutzpah in the financial world of today:
- Bank Fees: An institution used to make money by loaning your money to others. It operated in the greedy area between loan rates and savings rates. Now, it charges over $10 a month for the privilege to put your money in their bank. You have heard my rants about Free Banking before. The banking racket definitely has a corner on chutzpah.
- To say gas prices in Canada are set in Canada by the free market? Gas in holding tanks at the local gas station has gone up in price. This is due to international shortages. That is Chutzpah.
- Financial Bail Outs in the U.S.: You created the entire credit crisis through your own foolish (if not illegal) practices. Then you go hat in hand to the government asking for Trillions of dollars to bail you out. That is chutzpah. You lose consumers money through flawed methodologies. Then you ask for more money from that consumer through their taxes. You do this not to lose more money? Staggering. (Remember 2008?)
Anybody else wishing to chime in with their own private financial chutzpah examples, please feel free to comment!
Chutzpah?
For those of you who still don't get the concept of chutzpah the best explanation I can find is from Leo Rostein (author of the Joys of Yiddish ), who stated:
"...that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan."
Leo Rostein (The Joys of Yiddish)
Now that is chutzpah!
TD Financial statements.
Non-interest revenue (inc service fees): $6.5B
Non-interest expenses: $12.2B
The $1.5B in service fees barely covers 1/4 of their labour expense.
Without the service fees their net income would have been cut in HALF. Can you say dividend cut?
And seriously, who pays $25/month? I haven’t paid a penny in monthly fees in years.
I’ll play devils advocate here for a minute:
Compare what the banks generate in “non-interest related” revenue (like bank fees) to their expenses. You will find that most of them LOSE money on that part of their business. That means that without fees, they would lose even more. The only way to make that up would be to increase the spread between borrowing and lending rates.
As for gas, you think it is bad that gas stations raise their price when they can even though the gas in the tank is paid for. Of course the flip side of the coin is true. If your competitor drops their price you have to follow, no matter how much you paid for the fuel. Over the long run, you hope that the times you can increase your price will cover the times you have to sell at a loss. At a retail level, most stations are lucky if they can get 3-4 cents per liter gross margin. That’s before any expenses (other that the cost of the fuel) are paid.
They lose money on bank fees? Pardon? They charge $25 a month to do effectively not much, and they are losing money? Where do you get these numbers from?
Oh, yeah. I was sore of furious when I realized what was going on with the US government bailouts. How can any business be “too big to fail?” It’s such a ridiculous concept.
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