Modern family: Addition

Planning and execution

Meeting proceeded as usual and several changes were made. I also called for concerned personnel to start borrow loans from other banks.

Me: " Start borrowing from other banks and contact federal reserve as well. No, it's not just the Federal Reserve! Our trade association in Georgia is also going to issue an announcement to raise funds! I only have two requirements. One, the loan period must be a long-term loan of five years or more; two, the interest rate must not exceed 13%. As long as it does not exceed 13%, you can agree to it. The more the amount, the better!"

Banks these days are actually very traditional. In addition to the monthly management fees paid by depositors, there is basically only one way to make money, from loans. There are not many potential customers who need loans near this Bank, which naturally cannot make money for loans.

Not to mention investment income, the Current DWD financial services simply does not have the strength to get involved in the investment banking business. As for foreign exchange settlement and settlement business, DWD financial services is still intermediary.

So our first idea of ​​making money is also a loan. Borrow large sums of money at low interest rates by taking advantage of information gap. After the Federal Reserve raises the federal funds rate, the money circulating in the market decreases, and then it will be purely a seller's market.

Only I have money here, if theye want to borrow money, they can only find me! You have to eat the 20 points of interest! It can even be higher than the interest rate set by the Federal Reserve to lend. After all, the federal funds rate set by the Federal Reserve usually only affects the financial industry.

To put it bluntly, the federal funds rate is the interest that banks need to pay when they borrow funds from the Federal Reserve. Ordinary individuals are not eligible to borrow money from the Federal Reserve. In this way, how much interest will the banks give to individuals on loans?

I can make a calculated and intelligent guess. Banks pay more than 20 points of interest on the money they borrow, and the money they loan out will be more than 28%, nearing 30% interest rate.

Don’t forget, the standard for judging usury in USA is quite dynamic. Usury laws are state laws that specify the maximum legal interest rate at which loans can be made. In the United States, the primary legal power to regulate usury rests primarily with the states. Each U.S. state has its own statute that dictates how much interest can be charged before it is considered usurious or unlawful.

If a lender charges above the lawful interest rate, a court will not allow the lender to sue to recover the unlawfully high interest, and some states will apply all payments made on the debt to the principal balance. In some states, such as New York, usurious loans are voided ab initio.

The making of usurious loans is often called loan sharking. That term is sometimes also applied to the practice of making consumer loans without a license in jurisdictions that requires lenders to be licensed.

In my previous life, On a federal level, Congress had never attempted to federally regulate interest rates on purely private transactions, but on the basis of past U.S. Supreme Court decisions, arguably the U.S. Congress might have the power to do so under the interstate commerce clause of Article I of the Constitution.

Congress imposed a federal criminal penalty for unlawful interest rates through the Racketeer Influenced and Corrupt Organizations Act (RICO Statute), and its definition of "unlawful debt", which makes it a potential federal felony to lend money at an interest rate more than twice the local state usury rate and then try to collect that debt.

It is a federal offense to use violence or threats to collect usurious interest (or any other sort).

Separate federal rules apply to most banks. In my previous life, The U.S. Supreme Court held unanimously in the 1978 case, Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp., that the National Banking Act of 1863 allowed nationally chartered banks to charge the legal rate of interest in their state regardless of the borrower's state of residence.