Posts by Seth Millerd
Banks: Use Fintechs to Bolster Your Balance Sheet

Many clients have recently asked AQN how they can start or grow their consumer lending businesses to deploy low-cost deposits. COVID response and government stimulus led to reduced lending and reduced customer spending, resulting in shrinking loan portfolios and growing deposit bases. More banks and credit unions face a deposit to loans mismatch that leads to net interest margin compression; they are exploring ways to quickly deploy capital into new loans.

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Seth MillerdBanking, FinTech
The Payroll Protection Plan Subsidized 1 of 3 Jobs in Q2

One of the most intriguing questions about the efficacy of the program is what proportion of the job market was subsidized by the PPP. The US lost more than 20 MM jobs in April after unprecedented government stimulus. How many jobs would have been lost without that stimulus? It’s a frightening question, and one that can’t be perfectly answered. Not all jobs that were reported as ‘retained’ under PPP would have been lost without the program. And not all jobs that were saved by government action were saved by the PPP. Still, comparing the number of jobs retained to the overall size of the labor market illustrates how important the program was for stemming the unemployment crisis.

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Seth Millerd
Lower ROE’s in Banking: “Inefficient” has become “Resilient”

The world is in the midst of a global crisis.  So far, the COVID public health and employment crisis has not turned into a widespread banking crisis.  Why is this?  One reason is that banks are, in general, far better capitalized than they were in the last crisis.  While banks return on assets recovered to pre-financial crisis levels, return on equity never fully recovered due to increased capital requirements.  What was long seen as a downside in bank performance may finally be seen by investors and us all as a virtue.  Want to know more?  We go through all the math below.

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Seth Millerd