Deferring the Fed tax

Market value of big fintech companies rises to $1 trillion, more than the largest banks

There may be a changing of the guard underway in financials.

The market caps of payment stocks like Visa and MasterCardhave eclipsed the value of Wall Street’s biggest banks, even as their balance sheets remain significantly smaller in comparison.

Square, Visa, PayPal and MasterCard are collectively worth $1.07 trillion, while the “big six” banks, which include JPMorgan, Bank of America, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs are worth less than $900 billion in total.

The Fed charge by the banks occurs during Swift transactions.  Any place a non swift transfer can be inserted avoids the tax.  But Swift banks can avoid the tax on transactions and defer the tax to collateral. But then they do less S/L and more fintech transactions.  Shadow S/L will get the S/L business. 

It is a real tough choice when we force the central bank to collect taxes. A really bad idea and risks a Wile E Coyote moment if we are unprepared for the consequences.