Banks Are Service Providers! - Posted on August 22, 2011 - by Bullion Bling

That’s right; they provide services to their account holders.  Those services are provided to account holders, which would mean people with money.  That would mean the people that have money and can get the banks to work with them.  In some cases you can have money and not actually get the Bank to work with you.  See Banks are not in the business of actually holding money anymore; they are in the business of moving it.  Banks only make money if they are moving money around.

In the beginning of this I told you that Banks don’t need money.  They don’t.  The Banks make their money by servicing contracts between two parties.  For example, lets say I am a Hedge Fund and I am Banking with XYZ Bank.  Now I am going to work a deal with XYZ Bank to let me put my money in their bank and they are going to make me more money by lending it out for Mortgages or Loans.  The bank will make their banking fees and I am going to make money on the interest over the next 30 years.  And the good thing is I have my money tied up for the next 30 years in a tax shelter because it is out on loans.

They make money off of the interest on the loans and the bank makes fees for servicing the loan and handing the money.  It’s not the banks money, it’s the investment groups and they are lending it to the bank for the loan programs and pools.  At this point it should be pretty clear that the Hedge Fund has the money and the bank is just working the loan contracts and collecting the payments.  The Hedge Funds keep their money off shore and bring it in as loans or blocks of money for lending through REITs.  The Bank houses the accounts for these Hedge Funds.  The Hedge Funds are the wholesale trade line on the back end of the bank.  The Bank provides a service by holding the principle funds and loaning out funds for the loans.