Opinion

Felix Salmon

Chart of the day: Goldman’s integrity

Felix Salmon
Aug 20, 2010 17:09 UTC

integrity.png

My Reuters colleague Robert Fullem had a really bright idea a few days ago: he went through all of Goldman Sachs’s annual reports and counted how many times the word “integrity” was used in each one. And the results are pretty interesting. The reports have been getting fatter and fatter: that’s the red line in the chart. But all those extra pages don’t seem to give the bank any more opportunity to talk about integrity: quite the opposite.

In fact, the Goldman Sachs integrity index peaked in 2002, when the word was used 12 times. Since then it has been on a steady decline, appearing just twice in 2008′s 162-page report. Sad.

Incidentally, the word “honesty” appears exactly once in every report. But the word “ethics” has only ever appeared once since Goldman went public. And that was back in 2002.

COMMENT

Thank you for sharing my big guffaw of the day Felix!

Posted by hsvkitty | Report as abusive

401(k) plans aren’t just for retirement

Felix Salmon
Aug 20, 2010 14:22 UTC

One of the reasons that banks made so much money from overdraft fees is that people are naturally optimistic: they never think, when they open a checking account, that they’re going to go overdrawn very often. So overdraft fees aren’t a big deal to them at the time.

Much the same is true of retirement accounts like 401(k) plans. People load them up with stock-market investments, because they’re not going to touch the money until they retire, which is a long way off, and stocks tend to perform well over the long run. Financial advisers, similarly, tend to recommend stocks for the long run — and there’s nothing more long-run, for most people, than their 401(k) account.

Except in the real world it doesn’t work like that: Fidelity has just announced that by the end of the second quarter, 22% of its 401(k) participants had borrowed against their accounts. That’s about 2.5 million Americans right there:

“People have been looking to their 401(k) plans as a source of relief to help them meet financial hardships,” said Beth McHugh, a Fidelity vice president who oversees the area. “For many individuals that is their primary savings vehicle.”

The point here is that if your 401(k) plan is a savings vehicle which you’re going to use to help meet financial hardships, your risk appetite and asset allocation decisions are likely to be very different from what your financial adviser is probably telling you.

Even if you just take into account a 22% probability that you’ll need to tap your 401(k) before retirement, that should probably reduce the degree to which it’s invested in stocks. And that probability is low: 22% of Fidelity’s 401(k) plans have loans out against them right now. The number of the company’s plans which have ever had loans out against them is by definition substantially higher.

Very few people are so well off that they can be certain they’ll never need to tap their retirement funds before retirement. The rest of us should be a bit more realistic about that possibility, and invest accordingly.

COMMENT

on a similar note… in Canada we can borrow money to contribute to RRSP (401k equivalent), get a tax refund and repay the loan. I would love to know how many people actually end up not paying the RRSP loan.

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The WSJ vs Christopher Pia

Felix Salmon
Aug 20, 2010 13:43 UTC

The WSJ is going big today on this shocker from Susan Pulliam, splashing it across the front page of both the newspaper and the website:

The hedge-fund industry has been rocked over the past year by allegations that fund managers reaped illegal profits by trading stocks based on inside information. The investigation of Mr. Pia and the case against Moore suggest that commodities trading also can be an insiders game—a market where big investors may be able to throw their weight around to move prices to their advantage.

Really: that’s the shocker. Apparently traders sometimes try to move markets in commodities! Which, of course, is something so ingrained in popular culture that they were making blockbuster movies about it back in 1983.

Is the problem getting worse? Pulliam suggests that it is, talking about “a kind of improper trading that regulators worry is becoming more widespread”:

Cases involving investors trying to artificially move commodities prices are nothing new. But abusive trading practices have become more prevalent, says Bart Chilton, a CFTC commissioner, because regulators, until recently, have lacked the tools needed to aggressively go after and punish wrongdoers.

Over the long term, supply and demand dictates prices in the commodities markets. What concerns regulators, for the most part, are efforts to move prices over the short term. The growing number of large investors speculating in commodities has created “aberrations” that can present the “opportunity for foul play,” says Mr. Chilton.

This doesn’t make a great deal of sense. Commodities markets have always been largely unregulated, so that in and of itself wouldn’t explain why this kind of trading might be increasingly common. And if the number of large investors in the market is growing, why would that increase the frequency of price aberrations, which are normally a symptom of illiquidity?

Pulliam concentrates on one trader, Christopher Pia, but the only activity she ever talks about involves him buying large amounts of a certain instrument in the hope that doing so would move the market. That might be abusive, but it’s also been a standard part of the commodity-trading arsenal for decades. It’s also very dangerous for the trader in question: if the market gets wind of what he’s doing, he can lose a huge amount of money very quickly.

What’s more, I’m pretty sure that Pulliam is off by a factor of 100 when she tries to explain one of Pia’s trades:

In 2008, for example, Mr. Pia entered into a trade under which Moore would get a $25 million payout if the New Zealand dollar rose to a certain level. Goldman Sachs Group Inc. was on the hook to make the payout. If that level wasn’t hit, Moore stood to lose $1 million.

As the trade’s expiration date approached, the New Zealand dollar was trading about 25 cents below the price at which the contract would pay out. Mr. Pia got clearance from top Moore officials to spend billions buying New Zealand dollars, hoping the currency would hit the set price, according to the person with knowledge of the trade. Fifteen minutes before the contract expired, Mr. Pia began buying billions of New Zealand dollars, lifting the currency to the price at which Moore was able to collect the $25 million, the person says.

Gary Cohn, Goldman’s president, later congratulated Mr. Pia on the trade, the person says.

The kiwi dollar exchange rate is certainly volatile, but no trader would ever dream of trying to engineer a move of 25 cents. A quarter of a cent, maybe. And as Goldman’s reaction shows, this is the kind of trade which is more likely to get respect on Wall Street than to trigger an investigation into market manipulation.

The investigation of Pia and Moore seems to be par for the course when it comes to these kind of things: allegations are made, questions are asked, and at the end of the day everything’s pretty inconclusive. The trader in question has plausible deniability (“Mr. Pia said his last-minute timing was intended to thwart rival traders who often would try and buy ahead of Moore’s orders”), and no excess profits seem to have been made.

It’s possible that the ongoing CFTC investigation into Pia’s trading will result in some kind of censure or sanction. But even if it does, that’s not big news, it’s just the CFTC doing its job. I know that this is a slow news month, but I still can’t see much of anything here, let alone the “Wild Trading in Metals” promised in the WSJ’s headline. I’m sure that Moore Capital accounted for most of the volume in palladium for a few minutes on a few separate days. But that really is not a big deal, and it’s pretty sensationalist of the WSJ to compare it to much sleazier and much more illegal insider trading or pump-and-dump schemes in the stock market.

COMMENT

College basketball players have served serious prison time for point shaving where the only impact is the game was a little closer than it would have been.. Yet, when gamblers disrupt currency markets and commodity markets, you guys all yawn. What planet do you guys live on? This kind of manipulation has consequences for innocent people. Several times speculators have driven the price of natural gas through the roof, causing families and retirees to struggle to pay their utility bills. The commodities bubble of 2008 did serious damage to the livestock industry, and led to food riots across the world.

You guys do not live in a vacuum. Speculation has consequences for people who live in the real world, and you don’t seem to care.

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Who rents out houses?

Felix Salmon
Aug 19, 2010 20:31 UTC

Barbara Kiviat raises an interesting question: who is going to rent out all those houses which got bought by people who never should have been homeowners in the first place?

According to government data, 89% of single-family detached houses are owner-occupied. Meanwhile, 83% of apartments are rented. There is a certain logic to this. An apartment building provides an economy of scale for a landlord that a suburban housing development doesn’t.

To a certain extent, the necessary decrease in homeownership that the US has to see going forwards is going to be driven by urbanization. But that 89% figure is going to have to come down too, especially in areas like Las Vegas and Phoenix which saw a massive number of houses built to satisfy demand from subprime borrowers. So, who will the new landlords be, as we go from a country where 11% of detached houses are rented to one where that number is significantly higher?

They won’t be individuals, I don’t think. There’s something very eggs-in-one-basket about buying a big suburban home just to rent it out: a single bad tenant can devastate you, financially. But at the same time, property management companies understandably much prefer to look after big apartment complexes than sprawling suburban subdivisions.

In an era of very low interest rates, the relatively high rental yields on houses would be quite attractive to investors, I think, if they could somehow be turned into tradable securities. But the costs of buying and managing all those properties would surely be so substantial that they would take a substantial bite out of headline rental yields.

So who will end up renting out America’s suburban homes? I haven’t got a clue, myself, but I suspect it’s going to be a growing business in the years to come.

COMMENT

I would think we’re seeing a huge increase in the number of families who will be forced into renting houses in this economy. In rural and low income areas house rental as oppposed to ownership is usually at a higher percentage than in more affluent areas but in the current climate incomes are dropping nationwide. Couple this with the horrific housing market and the shambles that is the home loan sector and you can expect a huge uptick in families choosing to rent rather than buy.

Mathieu
http://www.cocoonbarcelona.com/

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What is Kroll doing for Montenegro?

Felix Salmon
Aug 19, 2010 19:28 UTC

Landon Thomas’s report from Montenegro is full of fun datapoints, including the fact that the prime minister, Milo Djukanovic, officially gets paid only 1,256 euros per month. There’s also a delicious irony in the fact that he avoided prosecution by Italian authorities by declaring diplomatic immunity. And then there’s this:

As part of the plan to lure investors from around the globe, Mr. Djukanovic, who is also chairman of Montenegro’s investment promotion agency, said last week that any person willing to invest 500,000 euros or more could become a citizen of Montenegro…

Government officials say that the new applicants under the citizenship program will be thoroughly vetted by outsiders like Kroll, the risk consulting company.

Kroll, of course, is the company which was instrumental in allowing Allen Stanford’s $8 billion Ponzi scheme to go on for as long as it did. It’s also the kind of company which tries to hire freelance journalists to be its spies, because they are seen to be independent and above suspicion:

With one Google search, anyone could see that I was, in fact, a journalist. If I went to Lago Agrio as myself and pretended to write a story, no one would suspect that the starry-eyed young American poking around was actually shilling for Chevron.

I’m not entirely impartial here. Back when I was a freelance journalist, one editor would do things like ask me to write a story for his magazine, and then, after I filed it, tell me that I was an idiot to write it without a signed commission letter and that he wouldn’t run it or pay me. He went on to become a top Kroll executive in Brazil.

But putting all that to one side, I’m a bit confused about what exactly Montenegro is trying to achieve by making a big show of hiring Kroll to vet potential citizens. It’s not going to convince anybody that Montenegro isn’t plagued with corruption — quite the opposite. And Kroll doesn’t come cheap, even if you’re a country of only 670,000 people — so the country has to be getting some benefit from this contract. I wonder what it might be.

Truth and rhetoric in job creation

Felix Salmon
Aug 19, 2010 18:00 UTC

The most important and most difficult task facing the Obama administration is making a dent in the unemployment situation. There aren’t many things that the government can do to try to boost the number of jobs in the U.S., but at the top of the list has to be attempts to boost lending to small and medium-sized businesses. These companies are a huge driver of employment growth — they account for two of every three jobs created in the past decade — but they never find it easy to get loans even in good times: all too often they have to resort to borrowing on credit cards, which can be lethally expensive.

This morning, a Treasury announcement showed one way that this can and should be done. Treasury’s CDFI Fund has awarded just over $100 million to 180 local financial institutions, including $750,000 to my own credit union. That kind of money, leveraged and lent out to small businesses, can do more for creating jobs than just about any other government program.

The CDFI initiative is small beer, however, compared to the Small Business Jobs and Credit Act, which would create a $30 billion fund to be used to encourage small banks to lend to small businesses. Combined with standard bank leverage, that could mean $300 billion in new, job-creating loans.

Where does the $30 billion come from? A significant chunk of it would come from five big oil companies:

[The Democrats' plan] would repeal Section 199 of the tax code, which currently allows these corporations to deduct six percent of their income from oil and gas production from their tax liability, effective December 31, 2010. This repeal would only apply to the five largest corporations with more than $1 billion of before-tax income.

The five major integrated oil companies, which include BP, had a combined profit of $25 billion in the first quarter of 2010. And, in the five years since enactment of the Section 199 deduction, these major integrated oil companies have posted $521 billion in profits. The profitability of these companies has been so robust that in the first quarter of 2009, when the U.S. GDP shrank by 6.4 percent and corporate profits decreased by 5.25 percent, these companies still earned more than $13 billion in profits. Furthermore, it is not clear the goal of this deduction, which is to improve America’s energy security by promoting domestic production, has been reached. When the Section 199 deduction took effect in 2005, domestic oil production averaged about 5.5 million barrels per day. Now, five years after the deduction took effect, domestic oil production has actually fallen slightly, to 5.48 million barrels per day.

Section 199 was always a barely-defensible boondoggle, designed to get around a World Trade Organization ruling saying that the U.S. couldn’t subsidize its domestic oil industry through something called the “extraterritorial income exclusion”. Its effect is to allow Big Oil to pay less in corporate taxes than most other companies: 31.85% rather than 35%. Does Big Oil really need this tax break? Of course not.

Repealing Section 199 would make sense on a purely fiscal level, even if it wasn’t linked to the Small Business Jobs and Credit Act. Repealing Section 199 in order to create new jobs just makes it more of a no-brainer.

Big Oil, of course, isn’t happy about this. And so one of its hired representatives sent me some talking points saying that repealing Section 199 would actually cost jobs. And a lot of them:

The White House’s proposed 2011 budget and measures under consideration in both the Senate and House aim to repeal this job-creating policy only for oil and gas companies. Such a move would levy an incredible burden on American businesses, workers, and households.

A 2008 study found such a repeal would trigger nationwide job loss of 637,000 workers and decrease total economic output by $185.9 billion over 10 years.

This was a study I had to see. It can be found here, or in slightly more detailed PDF form here. It’s 28 pages long, which is more than enough space, one would think, to explain exactly how the 637,000 number was derived. But instead it just teases. “Overall, the proposed changes are estimated to reduce U.S. employment by approximately 637,000 jobs over 10 years,” it says. But how was that number derived? Look at the relevant table, and it just says “author’s calculations”.

But the paper does give a broad indication of where the number came from. It starts with this:

In a 2006 working paper from the Congressional Budget Office, William C. Randolph estimated, based on an open-economy model with reasonable parameters for the U.S. economy, that roughly 70 percent of the U.S. corporate tax burden is borne by domestic workers…

Following the results from Randolph (2006), we allocate 70 percent of the burden of corporate tax changes to domestic workers in the form of lower earnings.

In other words, the paper simply assumes that for every extra dollar that a company pays in taxes, its workers will lose 70 cents in earnings. It would then follow that if the bill raises $13.57 billion over 10 years, workers would lose $9.5 billion in earnings. Which seems extremely dubious to me. But the paper doesn’t stop there. It then takes that $9.5 billion and magnifies it using something called “input-output multipliers” to come to the conclusion that total reduced household earnings, across all industries (rather than just in the oil industry directly) would be not $9.5 billion but rather $35 billion.

Finally, the report’s intrepid author, Andrew Chamberlain, decides that for every $54,881 in reduced household earnings, a job magically disappears. It’s not remotely clear where that number comes from, but using it, Chamberlain manages to conclude that the $35 billion in reduced earnings means that total employment would shrink by 637,195 jobs.

All of this is profoundly silly. The report doesn’t even make an attempt to work through the effects of higher corporate taxes on oil-industry employment: instead, it basically assumes its conclusion, by starting from the assumption that there’s a simple and direct correlation between any kind of oil-industry tax hike, on the one hand, and job losses, on the other. Is there any particular reason to believe that repealing Section 199 “would trigger nationwide job loss of 637,000 workers”? Of course not. There is good reason to believe, however, that passing the Small Business Jobs and Credit Act would help create millions of jobs.

So let’s not let Big Oil, or anybody else, try to get away with saying that passing this act would cost jobs rather than save them. It’s a ridiculous argument, which deserves to go nowhere.

COMMENT

“. . . at the top of the list has to be attempts to boost lending to small and medium-sized businesses “

Isn’t it odd that people who want the federal government (which cannot go bankrupt) to borrow less, also want the private sector (which is subject to bankruptcy) to borrow more.

“That kind of money, leveraged and lent out to small businesses, can do more for creating jobs than just about any other government program.”

This is the myth of fractional-reserve banking. It doesn’t exist. Bank lending is not limited by its reserves. A bank could have $0 reserves and still lend billions. Bank lending is limited by capital.

Rather than trying first to indebt business, the government first should provide business with profits. It does this by buying goods and services, in short, by deficit spending.

Rodger Malcolm Mitchell

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What Treasury’s thinking

Felix Salmon
Aug 19, 2010 15:02 UTC

Treasury’s blogger meeting on Monday has been covered by quite a lot of the participants — see Lounsbury, Tabarrok, and Smith.

On Wednesday, there was another meeting, this time with professional, salaried bloggers, with a decidedly center-left bias. (Tim Fernholz, Mike Allen, Derek Thompson, Shahien Nasiripour, Nick Baumann, Ezra Klein, me. Matt Yglesias was literally left out in the rain, unable to get past Treasury security.)

I half understand why Treasury makes the distinction between the two types of bloggers, but Ezra and I both felt a little jealous that we had to compete with Mike Allen asking about politics when we could have listened to a detailed and wonky discussion between Steve Waldman and Tim Geithner on the subject of bailout incentives.

The discussion was all held on deep background, so I can’t quote anybody. I can tell you that Geithner looked healthier than the past couple of times I’ve seen him: I daresay he’s actually getting some sleep these days, which has got to be a good thing. I also learned a fair amount about how Treasury views the world.

The big picture, at least as I grokked it, is that although the recovery started off stronger than Treasury had hoped, the broad economy is still in a pretty weak position. The Fed is doing its part to try to keep a certain amount of momentum going, but fiscal policy is harder, because it needs the cooperation of Congress. And it’s far from clear what kind of fiscal legislation can be passed at this point.

On housing, the main message from the big conference on Fannie and Freddie is that there’s a broad-based consensus, Rick Santelli rants notwithstanding, that large-scale government participation in the housing market is necessary to prevent further house-price declines. And yes, Treasury would very much like to make sure that house prices don’t fall any more than they have already. There’s no Bush-style policy of trying to maximize homeownership, or anything like that, and indeed Treasury now seems pretty resigned to the fact that its much-vaunted loan-modification program is going to have only a pretty marginal effect, doing more to delay foreclosures than to prevent them. But the very powerful government guarantee on Frannie’s bonds is here to stay, you won’t be surprised to hear. And even delaying foreclosures can be a good thing if it helps to give the broader economy a bit of time to recover.

In terms of markets, Treasury has no worries about bond bubbles. If corporate debt is trading at low yields, that’s great: it makes it easier for companies to borrow money to employ more people. There also didn’t seem to be much concern about the failure of the Chinese yuan to strengthen visibly against the dollar, even after the authorities there said that they would allow it to do so. Of course the US wants to see a stronger yuan. But it seems happy for China to get there in a relatively slow and unpredictable manner.

On unemployment, there’s definitely concern that the longer people stay out of work, the less employable they become, turning a cyclical problem into more of a structural one. But again, it’s hard to see what Treasury can actually do about that, given political realities.

Finally, I detected a change of rhetoric on the subject of Basel III, as various end-of-year deadlines approach and seem certain to get missed. A few months ago, there was real hope that the US and Europe would be able to agree on tough new standards for bank capital and liquidity requirements. Today, there are real fears that they won’t be able to come to an agreement, and that the toughest standards acceptable to the Europeans will still be too lax for the Americans, whose banks are much better capitalized right now.

Negotiations are still ongoing, and no one yet is spending much time worrying about what might happen if they fail. The aim, very much, is to come out of the process with a set of strong global regulatory benchmarks. And the groundwork seems to be there: the Basel technocrats have done an excellent job of closing loopholes and defining both capital and liquidity in a rigorous manner. The only question now is to fill in the all-important blanks, and to agree on actual numbers for those ratios. That won’t be easy.

COMMENT

Treasury doesn’t borrow, as implied by dllahr. Treasury bonds are not the same as corporate bonds. Econ 101 — if it were taught correctly.

On a related note, which is more ridiculous — the notion of a bond bubble, or the notion that we can’t have a double-dip because the yield curve is so steep?

Posted by DetroitDan | Report as abusive

The Treasury-bubble meme

Felix Salmon
Aug 18, 2010 22:13 UTC

It’s something of an emerging meme: Treasuries are the new dot-com stocks. Barry Ritholtz says so explicitly, while Jeremy Siegel and Jeremy Schwartz lay out the, um, logic:

Ten years ago we experienced the biggest bubble in U.S. stock market history—the Internet and technology mania that saw high-flying tech stocks selling at an excess of 100 times earnings. The aftermath was predictable: Most of these highfliers declined 80% or more, and the Nasdaq today sells at less than half the peak it reached a decade ago.

A similar bubble is expanding today that may have far more serious consequences for investors. It is in bonds, particularly U.S. Treasury bonds…

The rush into bonds has been so strong that last week the yield on 10-year Treasury Inflation-Protected Securities (TIPS) fell below 1%, where it remains today. This means that this bond, like its tech counterparts a decade ago, is currently selling at more than 100 times its projected payout…

The possibility of substantial capital losses on bonds looms large. If over the next year, 10-year interest rates, which are now 2.8%, rise to 3.15%, bondholders will suffer a capital loss equal to the current yield. If rates rise to 4% as they did last spring, the capital loss will be more than three times the current yield. Is there any doubt that interest rates will rise over the next two decades as the baby boomers retire and the enormous government entitlement programs kick into gear?

I’m sympathetic to the Jeremys’ underlying idea, but this argument is utter nonsense.

For one thing, a drop of 80% in a stock price is not in any way similar to a drop of 3% or even 9% in a bond price. And with Treasury bonds, no matter how much they cost, you’re always guaranteed to get back more money than you paid for them — all you need to do is hold them to maturity.

It’s simply untrue to say that the 10-year TIPS “is currently selling at more than 100 times its projected payout”, and it’s silly and specious to use that number to try to imply that the security looks like some latter-day Juniper Communications.

And note the rhetorical sleight of hand that the Jeremys manage to hide in that final paragraph: they start by talking about capital losses if rates rise sharply over the course of just one year, and then say that they have no doubt that rates will rise “over the next two decades”. (They also fail to explain why retiring baby boomers mean higher interest rates: I see no evidence that countries with “enormous government entitlement programs” have higher rates than those without them.)

Treasury yields are indeed low right now, but that’s largely because the economy is weak. Most bond investors would love nothing more than for the Jeremys to be proved right and for stocks to start rising impressively as the economy recovers — even if that means losing money on their bond investments. But if the economy gets worse, having your money in safe Treasury bonds is going to help you sleep a lot better than having it in risky and volatile stocks.

COMMENT

This article by Siegel and Schwartz (which I have not read and don’t intend to) will go down as a classic of stupidity along with “Dow 36,000″, published in 2000, and Nassim Taleb’s: “Every Single Human Being Should Short Treasuries”, from February 2010. Honorable mention to Ben Stein for guaranteeing that the U.S. wasn’t in recession in June 2008 when we were, in fact, in a recession (though it yet hadn’t been officially declared). Then of course, we shouldn’t overlook the catch phrases “Goldilocks economy”, “soft landing”, and the various problems that were described as being “contained”. And those “green shoots” are beginning to wither…

Posted by DetroitDan | Report as abusive

Can we give minors bank accounts?

Felix Salmon
Aug 18, 2010 21:10 UTC

Sudeep Reddy has a story today about the latest attempts to try to get bank accounts for the unbanked. Such attempts are always well-intentioned, and nearly always doomed: this is a very tough nut to crack.

But the fact is that the single most important part of banking the unbanked has already been done, with the passage of the Dodd-Frank bill. Pretty soon, overdraft fees are going to be tightly regulated, and much harder to rack up inadvertently. They have historically been the biggest reason why people close their bank accounts, and if they go away that will be a huge help in terms of getting the unbanked back into the system.

There’s also an intriguing idea at the end of the story:

Another novel approach: pushing consumers into bank accounts when they are young, as New York City started doing this year with its summer youth work program. If workers didn’t have a bank account, they could create one on the spot—branded as an “NYC First Account”—in order to get paid through direct deposit.

Of the 9,000 eligible young adults over age 18 offered the account, the city’s Department of Consumer Affairs says, more than 2,000 signed up.

The problem here, of course, is that the “when they are young” bit doesn’t really square with the “over age 18″ bit. Is there any way to relax the legal requirement on parents having to open accounts on behalf of their children?

It’s quite sad, I think, that minors aren’t legally allowed to have their own bank accounts. It would be great to give a bare-bones, no-overdrafts-allowed, no-fees savings account to all schoolkids, just to get them used to banking. They’re allowed to open joint accounts with their parents, and write checks on those, so I’m not sure what the problem would be by giving them an account of their own. But I’m sure the lawyers can think of something.

COMMENT

If it’s just a savings account with no overdraft and they don’t have cheques or a debit card, why would a bank need to enforce a contract against a depositor who happens to be a minor?

Posted by GingerYellow | Report as abusive
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