At last count there are at least 10 banks in the City of Sonoma and more coming: Bank of the West, Wells Fargo Bank, U.S. Bank, Exchange Bank, Sonoma Bank, WestAmerica Bank, Rabobank, Citibank, Union Bank and Bank of America. It seems like a new bank opens in a new location every few weeks. This leads me to suspect that the banking business is a pretty good way to make a lot of money.
I have several bank accounts – personal checking, business checking, etc. I accept credit cards in my business so I also have a merchant account. My wife has her business account at the same bank. We rent a safe deposit box and own a few CDs. All in all, we spend a lot of time on banking, going to the bank, dealing with bank statements and trying to stay on top of our money. All this, of course, makes money for the bank.
I’m not against banks making money, but I will confess that I often find it nearly impossible to figure our why I’m being charged for this thing or that. Getting a document notarized takes usually five minutes and costs $10, which works out to $120 an hour. Something tells me there’s a hefty profit at $120/hr. I get charged $79/yr. for PCI compliance. PCI compliance is mandated by the credit card companies to make sure that credit card information is kept secure. That’s fine, except I don’t accept credit cards online. When I ask why I am being charged $79, the bank says they can put me in touch with the company that oversees PCI compliance. In other words, the bank doesn’t know why I am being charged, either. Insufficient funds: $25 bucks. Wire transfer into my account: $30 bucks. The list goes on.
Now I understand that a bank needs to pay its employees, rent, electricity bills and insurance, mow the lawn and plant flowers, wash the windows, vacuum the carpet and so on and so forth. But something about the banking business is not like ordinary business, and we all know what it is: government guarantees. Bank deposits are guaranteed by the U.S. Government, and that means banking is kind of a low-risk business. Not only that, but banks can borrow money from the Federal Reserve at rates far lower than you or I can borrow money. Then the bank lends the money out, at nice high rates of interest and makes a tidy profit. Sweet.
It’s not like there is an alternative to a bank. Mattresses fell out of favor a long time ago, as did loose floor boards. Does anyone still have floor boards? In short, we all need to use banks so the question is why are banks so greedy and nervous about everything? And did you ever notice how quiet and uptight it is at most banks? Something about money makes bankers nervous, which is kind of strange since all they deal with is money.
I’ll bet starting a bank is not too hard. Get some capital, a good location, signup with The Fed, dot the “I’s” cross the “T’s” and bada-bing, you’re in the banking biz. There’s an empty corner where the Creamery used to be, so what do you say, Sonoma Creamery Bank? Free ice cream cones on Friday!
