"It's not that bad, not yet anyway! The Hunter family is still negotiating with those big banking conglomerates, scraping by. Besides, our financial situation is still decent!"
Hearing Goodman's pessimism mixed with a hint of charm, Carter couldn't help but smirk, waving his hands to dismiss Goodman's escapist thoughts.
"Besides, I still have over ten million in my hands. I'll inject more capital into the bank later. With the establishment of reserve ratio requirements and the opening of Fed services, I can't hide this money anyway. Instead of hiding it secretly like now, or depositing it into the bank as customer deposits, squeezing our funds. It's better to inject capital into the bank, which can increase capital and expand my capacity for commercial investments under the bank's name."
The specifics of the new law are interesting. The limit for issuing commercial loans or consumer credit, such as credit card business, is set at 5% of bank assets, total assets including deposits and owner's equity. The limit for business investments, such as purchasing commercial paper or bonds, is 20% of self-assets.
If my understanding is correct, this so-called self-assets refer to bank capital, right?
After subtracting the funds spent on HT company's vehicles, personnel salaries, construction of cold storage, warehouses, factories, office rental, or prepaying some cooperation deposits, Carter's cash of about 28 million is still left with at least 16 million. Injecting this money into the bank could significantly boost Blake Bank's presence in southeast Georgia.
It might even lead to a somewhat comical situation where the business investment limit of $3.2 million completely exceeds the consumer credit limit of $1 million.
Even with a consumer credit limit of $1 million, it's already comparable to many commercial banks. Of course, this is assuming we ignore annoying geographical restrictions and don't compare ourselves with giant banks like Bank of America or JPMorgan Chase.
At our current strength, we can't compete with them for now. But if we focus on our own turf, Carter realizes, by doing so, his bank has already broken through the restrictions on specialized operations.
There's a lot of maneuvering room!
"No, I need to call Montgomery in Memphis quickly. Let's not buy new cars. If we buy used cars, we can save at least a million dollars. By recovering this money, I'll have around $3.4 million in investment capacity and over a million in consumer credit limit. That should be enough to do quite a bit. This might just be an opportunity!"
With this in mind, Carter immediately picks up the phone on his desk and dials Montgomery in Memphis. Meanwhile, Goodman carefully savors Carter's words while continuing to peruse the contents of the law.
Carter's call comes in at an opportune moment, just as Montgomery had narrowed down the options for truck suppliers and was about to send someone to sign the deal. He picks up the call.
After explaining the gist of the new law, Montgomery can also understand Carter's concerns. After a brief discussion, they decide to slash the original plan to purchase 100 new trucks to 10 new trucks and 90 used ones.
After all, being a new company, there still needs to be some good-looking vehicles to maintain appearances. Being able to recover over a hundred thousand dollars, Carter is already satisfied. When Carter hangs up the phone, Goodman speaks up again:
"You've got a point there. Maybe I was overthinking it. Just now, I was thinking, Pearson City hopes you can provide loans to those old restaurant owners? If successful, as many as possible should be lured... I mean, convinced to join the HT plan. The more businesses join, the more mortgage loans we can issue."
"If the HT company's profits can be maintained, then the default rate for this series of loans shouldn't be high. Maybe we are the beneficiaries of this reform?"
As Goodman ruminates, his mind suddenly buzzes. How did this turn from bad to good?!
They can't survive because they can't issue loans! Local loan demand is limited, and a large amount of funds are hoarded and can't be used for profit, but rather have to pay interest on it, eventually leading to bankruptcy. But here... If the HT plan goes smoothly, the loan demand here will not only be high but extremely vigorous!
Goodman contemplates this turn of events while continuing to sift through the contents of the law.
"Certainly possible, but it all depends on the specific execution. Let's hope for the best. Oh, Goodman, could you explain the National Settlement Service to me? I roughly understand what clearing means, but the specific procedures, you've been handling them before. I need to know the workflow."
Carter shrugs. Although his words were subtle, his increasingly relaxed expression bluntly revealed his thoughts.
With a rough direction set, Carter shifts his attention to the next item: allowing non-Fed member banks to enjoy Fed services and allowing private institutions to participate in settlement services.
Fed services encompass many things. For example, the discount service mentioned earlier is like the Fed lending you money! Though both are loans, the nature of the Fed member bank's loan is more supportive than lending. Like the $500,000 loan I got from the Atlanta Fed before, that was purely a bank-to-bank loan, not a discount.
In terms of interest rates, periods, and difficulty in approval, they are completely different tiers. Now, however, my financial situation is okay, and I don't need the discount service for now. Naturally, Carter's attention shifts to the National Settlement Service (NSS), which almost follows the discount service.
"Okay, before we get into that, do you understand the concepts of settlement and clearing?"
"Yeah, I have a basic understanding. Clearing is the transfer of debt and credit rights, and settlement is the transfer of funds, right?"
Carter nods. He still has some basic concepts. Although he didn't stop absorbing knowledge necessary for banking in addition to high school courses, due to academic reasons and not being a bank manager, he never participated in the actual daily operations of a bank. So, he doesn't understand or understands the operational procedures deeply.
Originally, Carter planned to take it slow and experience firsthand the daily operations of bank employees of this era when he had free time during the holidays, and then slowly understand and comprehend it.
But the sudden change in the law forced Carter to accelerate to quickly understand the logic, operating procedures, etc., so that he could make accurate and timely decisions based on his understanding of the future!
"Right, settlement and clearing are essentially like that. Clearing calculates how much money you owe to whom and who owes you, and then settlement is the corresponding transfer of funds."