this post was submitted on 16 Oct 2023
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Apple
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I don’t understand how they could be taking such a big loss on those accounts. Federal reserve rates are above 5%…
Also, it’s hard to feel bad for the bank taking a billion dollar loss when they have like 1.5 trillion dollars in assets.
The article doesn't actually have any data at all regarding the savings accounts. It combines losses on credit cards with a pessimistic quote from someone at the launch of the savings accounts. The credit card losses also look worse than they are. Goldman Sachs definitely seems to think they made a mistake, so I don't doubt they're losing money, but the numbers themselves are primarily paper "losses." They're setting aside a huge amount of money for theoretical future defaults on repayment. My understanding is the numbers are extra high right now precisely because they're brand new and haven't previously been provisioning for future losses. I don't know the exact numbers involved but it seems like they're recording extra losses last year and this year that would cover several years of future losses (cynically, I'm just going to assume this is some sort of strategic tax dodge).
Yeah, that’s a good point. The text in the article is confusing. Probably because it’s just rushed clickbait.
I would guess the savings accounts just aren't bringing in as much in deposits and there are more small accounts and higher operational costs than they planned for.
$10B US in deposits in the first four months of existence
There’s been no indication at all that the savings accounts themselves are unprofitable. This article combined a journalistically negligent misquote from a single person at the internal announcement of the savings accounts with fuzzy numbers about previous provisions for future losses from the credit card. If they had any integrity, they’d just delete the whole article.
Sounds like someone doesn’t know how to run a bank. That’s ok though, Apple has plenty of money, a loyal customer base, and plenty of other suitors. I’m sure if Goldman is no longer interested that someone else will be.
What company exec is gonna see the billions in losses and think "our shareholders are gonna want that"?