Filed under: Odds and ends, Apple Financial
Slate throws Apple a $100B idea, suggests iBank
In an interesting -- not to say wildly speculative -- essay, Slate Magazine's Karim Bardeesy says that Apple should take some of its $28 billion and start a bank.
During Wednesday's conference call, Apple CFO Peter Oppenheimer made it clear that the company was looking to keep its cash right where it is. Anecdotal evidence suggests that now might not exactly be the best time to get one's feet wet in high finance, but Bardeesy does make a few interesting points.
First, if Apple takes $15 billion of its own cash, at "regulated reserve ratios," Apple could offer $100 billion in loans. Couple that with the company's tech savvy and trustworthy brand, Bardeesy says, and you're looking at an opportunity to "revolutionize the industry."
Second, Bardeesy suggests creating an internet-only bank, taking deposits from everyday people -- via an iPhone fund transfer app, of course. He says the rise of Internet banks isn't unprecedented: just look at how popular they were in Iceland! (Ignore for now those banks' participation in the total collapse of Iceland's banking system.)
And how about a slice of that sweet, sweet government bailout? Apple can have some -- if it's a bank. "Goodie side benefits to banking status include access to some of that TARP money and a steady revenue stream to smooth out any bumps in retail demand for other Apple products," he writes. Contradictorily, in his final sentence, Bardeesy chides the banking industry for "pocketing taxpayer billions while sending nary a penny [his] way." You can't have it both ways, buddy.
In sum, Bardeesy admits that "Apple has prided itself on sticking to its knitting and not indulging in diversionary acquisitions or enterprises." He claims, however, that "an exception can be made when economy and country are at stake and profits are on the table."
Can it? Really?
Thanks to everyone who sent this in.
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Reader Comments (Page 1 of 2)
ericdano said 1:42PM on 1-23-2009
Better idea. Instead of having CARD SERVICES handle Apple finance if you purchase a new Mac, have Apple do it. I bought a MacPro last year, and I noticed a month or two ago the interest on that credit card jumped to 23.99%. WTF? I have been making payments, and have not used the card for anything other than that initial purchase.........
Apple, you could make a KILLING by offering financing for new Macs and related products that was reasonable.
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kev orng said 2:07PM on 1-23-2009
"Introductory rates." Oldest trick in the book, and the very trick that's making people lose their homes. Less extreme with a Mac Pro, of course.
Beat them at their own game; transfer it to a lower interest credit card. If they up the rates on you, transfer again, and destroy the original card (so you don't keep using it by accident).
But really, as with any debt, the only answer is to stop the bleeding. As soon as you can pay it off, do so, don't ride out the payments.
When I got my last Powermac, I took the financing, but paid it off in four months. When I got my MacBook Pro, I just took the money that was in my MacBook Jar and bought it outright. I won't incur any more debt unless I'm buying a house.
Besides, Apple doesn't offer financing in Canada anymore anyway.
Quix said 2:23PM on 1-23-2009
Wow, banking. What a *great* time to be getting into that business! :|
Now we see why some people write for magazines and others run multi-billion-dollar businesses.
Getting into banking would be a serious deviation from Apple's core competencies. And we've all seen how well Microsoft has fared when it tries to enter and conquer new markets with which they have no experience nor credible ideas.
Nay, I say Apple take some of that $28 billion and fix some of their existing products. Copy/paste and video on the iPhone (among other things). An expandable mid-range tower for people who can't afford a Mac Pro but want the expandability of a tower. Better graphics acceleration across the entire line. More USB ports on the iMacs so I don't have hub and cable mess all over my desk. The list goes on.
We, your customers, gave you that $28 billion in cash, Apple. How about returning some of it back to us with some real product enhancements (and perhaps a price cut here and there)?
Cherman said 1:45PM on 1-23-2009
It is very hard for any bank to compete with the banks that are getting the big loans from the government, but since Apple has a good stack of money, it could make loans of even greater values than stated on the article, up to 100B.
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Sean said 1:49PM on 1-23-2009
Yeah, this is a great idea, let's take a healthy company like Apple and encourage them to plunder the TARP funds that are raping our current and future generations financial stability.
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ryan said 4:02PM on 1-23-2009
thats the dumbest thing ive ever seen and shows a shocking lack of editorial oversight at slate. one example, and not the only part of the excerpt that doesn't make sense, is that you don't get tarp funds just because you're a bank. tarp funds are to recapitalize ailing banks that have bad loans on the books.
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iPhoneMilk said 2:00PM on 1-23-2009
Sounds like an amazing idea to me.... Personally i'd love to have an Apple Bank account =)
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William Hook said 2:06PM on 1-23-2009
I'd want one just for the nice ajaxy website, and sexy card.
Anyone care to mockup an Apple-branded Visa card? :D
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FCM said 2:21PM on 1-23-2009
TARP access? Uh, think again. Unless they expanded the program from the last time I checked, TARP funds could only be used to purchase assets that were on a company's books before TARP was introduced (around September, I believe)....
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Wheels said 4:38PM on 1-23-2009
That was the original idea, but Paulson, genius that he is, did an about face as soon as the TARP bill was signed and decided to buy bank stock instead of toxic assets. Very little, if any, of the first half of the TARP funds went toward buying bad assets. The majority of the funds went so bigger banks could gobble up weaker banks. This has done nothing to free credit markets to where they need to be, and has made the stronger banks weaker.
And, to access TARP funds, all you have to do is start offering banking services. GMAC did this by forming GMAC Bank out of whole cloth.
Gregg Palmer said 2:23PM on 1-23-2009
This is a bad idea. Apple is a tech company...not a bank. I work with banks on a daily basis and while a novel idea, its a bad one.
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Gary said 2:19PM on 1-23-2009
For some people that do not know how a hypothetical Apple bank can have $15 Billion in the "bank" and lend out $100 Billion, take a look at the link on the link. It's called Fraction Reserve Banking, and it allows so-called "banks" to lend out more than they actually have.
http://en.wikipedia.org/wiki/Fractional-reserve_banking#How_it_works
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Jeremy said 2:21PM on 1-23-2009
Always a good idea to give a business to a bunch of folks who have absolutely no expertise in that business. Nothing can go wrong there, eh? ;)
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sharkboy42003 said 2:57PM on 1-23-2009
Well...I for one thinks juniper bank sucks...apple shud do their own bank and offer their own iTunes rewards and then actually look at their feedback we leave and maybe,JUST MAYBE, make something or upgrade something we actually friggin want *ex: my friends are pissed bc my "revolutionary" iPhone 3G won't do mms the RIGHT way.
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Peter said 2:59PM on 1-23-2009
I'm considering unsubscribing from this blog for posting an article of such low quality and value to anyone who has an inkling of understanding of Apple's business. Please, don't waste your readers' time.
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Michael Rose said 3:40PM on 1-23-2009
Peter, you do understand that it's SLATE's idea that Apple should become a bank, not ours?
Robert's post clearly indicates that he thinks it's a bad idea for Apple to do this.
jonbruck said 3:17PM on 1-23-2009
People love Apple. People hate banks.
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glad said 3:26PM on 1-23-2009
I hope the Slate writer Karim Bardeesy wasn't getting paid for such a dumb idea or I guess he was just kidding around, right? What next Microsoft to set up it's own chain of coffee shops with free wifi and doughnuts! Obviously this guy does not follow the economy (look at GM's venture into financial services). it's lame and how come Warren Buffet hasn't set up his own bank or maybe a few of those Texan billionaires?
Let Apple keep its cash pile where it is safely under the bed as times will get tougher and they may need to dig into it. Apple is a great example of how a good business should be run, good margins, big cash pile and NO DEBT, unlike many of the businesses who are going to the wall as they have NO cashpile, low margins and too much debt.
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SubGenius said 3:29PM on 1-23-2009
I like the idea of Apple offering financing for its computers.
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Aelver said 3:32PM on 1-23-2009
Fools! 'iBank' already exists!
http://www.iggsoftware.com/ibank/
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