No, consumer loans that aren’t classified as real estate are less than 5% of our total loan portfolio. It’s extremely rare we have to charge off a consumer loan.

Come on man, if you actually worked at a bank of that size then there’s no way you would say interchange is “peanuts.” Chase made 20 billion from interchange and 51 billion in credit card interest in 2019. Calling that peanuts is insane.

The bank offers several different lines of credit. The most common ones are HELOCs, and business LOCs. We offer credit cards but obviously we use Mastercard or Visa for our consumer credit card providers. We make money from credit card transactions. When you swipe a card the business gets charged for a swipe and we get a certain % of that. We obviously make money from interest.

Most medium sized regional banks like mine (total loan portfolio of $1 billion - $5 billion) make 75% of their income from businesses. Consumer loans just aren’t a money maker for us. Credit card debt is less than 1% of our portfolio, auto loans are around 2%.

You’re actually the best kind of customer for a bank. Chase makes half of their credit card income (1.4 billion last I checked?) from transaction fees when you swipe your card. You’re basically a risk free money maker.

Credit analyst for a bank.

You’re wrong. We don’t like increasing interest rates and it usually doesn’t have a large effect on net earnings. Although we collect more interest our default rate climbs and it usually wipes out any gains we make. In fact, a rising rate environment can lead to increased bank consolidation because banks with poor management and underwriting standards have their default rates climb faster than interest payments can cover. This leads to a bigger bank buying them out or worst of all the FDIC shutting them down and auctioning them off to another bank.

Furthermore, what you call “financially illiterate” are often people dealt a bad hand or in a really hard place (minorities especially). What do you want us to do? Return to a system that basically red lines entire groups of people because they’re struggling? Lines of credit are extremely important for not only businesses but giving people some flexibility. There are absolutely people that can’t handle their debt and that’s exactly why banks have credit departments monitoring underwriting and making sure the bank is in compliance with the FDIC or other regulatory agencies.

I think this graph is before gov transfers. After adjusting for tax brackets and welfare programs most of these countries will have much smaller gaps. For example, the US is slightly above middle of the pack for inequality after taking into account welfare and other transfers but looks much worse before adjusting.