Big Tech Firms Are Behaving Like Big Banks – Bloomberg Gadfly
March 16, 2018 \ 1 Comment
Full Article: Bloomberg Gadfly
Picture a bank that lends $1 billion to small businesses in 12 months, holds $150 billion in corporate bonds, runs the world’s largest money-market fund, offers mobile payments and credit cards, and gives customers cash balances that can be topped up across thousands of homely bricks-and-mortar outlets. Except it’s not really a bank at all, but a technology firm.
I disagree with the thesis of article but it raises valid points (which we saw going into the last crisis in a different guise). The 101 of a bank is to lend to individuals or/and businesses and to have a specialization at determining counterparty credit risk and charting the appropriate interest rate (or not lending at all). Amazon isn’t doing that and it’s the most advanced of the three tech firms cited. Yes, Apple and others have massive treasury operations – investing vast sums of money into (typically) short dated bonds. Just like a mutual fund but not a bank.… Read more »
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