Business

Distribution

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Chase (formerly Bank One, which merged with JP Morgan Chase in 2004) has a large network of branch offices here in Chicago. When I moved into Bucktown about 6 years ago, there were no branches locally; but soon they filled in every corner (it seems) as the neighborhood gentrified. In River North there weren’t a lot of branches because there was limited residential traffic until recently when all of the condominiums were built over the last 5 years or so; now we have branches all over the place.

In a branch near my condo in River North (which oddly enough has a “fake” 2nd story that you can see as you ride on the Brown line of the “L” overhead) they added a coin counting machine that you see in the picture above. Unlike the coin counting machines in grocery stores, this coin counting machine doesn’t charge 5 to 10 cents for each dollar – you just feed in your coins and collect your cash from the bank teller (presumably in paper dollars, else why else visit?).

The coin counting machine was great; I lugged over plastic cups full of change and received over $200 in return. While I was waiting for my cash, I started up a conversation with the bank teller, who said that they were going to leave the coin counting machine only for a limited time but it was bringing in tons of foot traffic to the branch so they decided to make them permanent.

I found this to be interesting; only a few years ago banks were trying to get customers to use their online services instead of going to a retail branch and physically speaking with a teller or representative. This article from 1999 talks about banks that were charging $2 to speak with a bank employee for transactions that could either be done online or by phone.

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More Media Disintermediation?

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Last month, Marc Andreessen suggested that the Hollywood writers’ strike…and the response of the studios to that strike…will accelerate a structural shift in the industry–specifically, a move toward a Silicon-Valley-like model in which the creators of the product–the talent–have strong ownership interests in the companies. (Link via Newmark’s Door.)

A couple of days ago, the Los Angeles Times ran this headline:

Striking writers in talks to launch Web start-ups

Dozens are turning to venture capitalists, seeking to bypass Hollywood and reach viewers directly online

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Problems With Self-Selected Survey Data

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Jim Miller, discussing customer-satisfaction surveys, highlights a common error of inference:

Consumer Reports does not seem to understand that all its surveys, not just those on cars, have a systematic problem; the respondents are self selected, which often biases the results, as any good survey researcher can tell you.

So (following Jim’s example) if the Consumer Reports survey shows the Camry as more reliable than the Corvette, is this because the Camry is really more reliable or is it because people who buy Corvettes tend to drive them hard? The reliability data provided by Consumer Reports do not provide enough information to answer this question.

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Idiots

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Tired of filing paper statements for checking accounts, I logged onto my bank’s website to see how to sign up for electronic-only statements (a service the bank has been pushing heavily). Here is what they say:

Your electronic statements are exactly the same as your paper statements. Each month you will receive an email informing you when your statement is available online. Your statements will remain online for 24 months on our secure web site and may be downloaded or printed for permanent retention.

But this is a lie. Electronic statements are not exactly the same as paper ones. Paper statements don’t disappear after two years in my filing cabinet. (There have been instances when I needed transaction information that was more than 2 years old.) So if I go electronic I will have to do even more work, printing statements myself, if I want to continue keeping records as I do now. I can see why the bank likes this arrangement but what’s in it for me?

Banks are so stupid. If they promised to keep my statements on their computers indefinitely I would sign up to go paperless in a second. They would still come out ahead. Can anyone imagine that it costs them less to print and mail twelve statements a year — plus credit-card and loan solicitations, privacy policies, etc. — than to store my data for the same period on their hard drives? What a bunch of dopes. Of course these are the same people who always jump, lemming like, into whatever lending sector is currently overdone and therefore fraught with hidden risk. And then they get burned and become irrationally risk-averse until the next business fad comes along.

UPDATE: Another bank makes the electronic statements available in perpetuity, but requires me to request them a day before it will show them to me online. That’s better, but why can’t they simply make all statements readily available all of the time?

How to Lose a Shirt You Don’t Own

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One reason the effect of the US subprime loan crisis has spread so far and so quickly is that financial institutions have many ways of participating in the debt market other than issuing or buying debt instruments. Most of the financial news I have read omits explanations of how it happens, other than generic references to “derivatives.” Here are some of the other ways to have a loss without touching a mortgage.

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