Buffett/Berkshire - general news

[gfp]

All of these products are just hoping that you will pay some interest at some point, and looking at the numbers quite a few people do pay interest to SYF.  And when they do, it's a whopper - huge APRs.  So the higher charge-offs and delinquencies aren't too surprising because you are talking about people who are willing to owe a balance that compounds against them at rates approaching 30%!  These are not the most sophisticated users of credit.  I'm sure many could transfer that balance to a competing product with an 18 month 0% offer or something and pay it down without the compounding against them.  But they don't.

They do make a % of everything you buy using the card. So you've probably made them quite a bit of money over the years. Yes they would prefer interest on top of it but it's not a deal breaker.

So I always wondered about this and haven't dug deep enough to answer it for myself.  I always assumed that the 5% being paid to me is being split between the merchants (say Lowes) and Synchrony.  If that is the case, SYF is not getting a 'swipe fee' like a regular card network card would get.  The cards I am describing cannot be used at retailers other than the one on the card and have no Visa, MC, etc affiliation.  Someone is covering the 5% to me and I really doubt that SYF is getting a 'swipe fee' net of that 5% - i.e., it would really surprise me if Lowes or Amazon ate the entire 5% and then paid SYF a swipe fee on top of that (even if the swipe fee was below market rate).

Do you know for sure or are you also speculating?

[rb]

So I always wondered about this and haven't dug deep enough to answer it for myself.  I always assumed that the 5% being paid to me is being split between the merchants (say Lowes) and Synchrony.  If that is the case, SYF is not getting a 'swipe fee' like a regular card network card would get.  The cards I am describing cannot be used at retailers other than the one on the card and have no Visa, MC, etc affiliation.  Someone is covering the 5% to me and I really doubt that SYF is getting a 'swipe fee' net of that 5% - i.e., it would really surprise me if Lowes or Amazon ate the entire 5% and then paid SYF a swipe fee on top of that (even if the swipe fee was below market rate).

Do you know for sure or are you also speculating?

These are all covered by private agreements which are kept secret. From what you're describing the agreement is probably like this: Lowes eats the 5 - that's what they pay to keep you tied to them and jams SYFs card down ur throat. In turn they do pay SYF a swipe fee but likely a heavily discounted one. SYF gets paid some and Lowes benefits cause you use your SYF card and they pay lower swipe fees than they would have if you used you visa instead.

[pau_]

Buffett's NYT: Berkshire Hathaway Will Not Increase Its Oncor Offer


"We're committed to being an exceptional long-term partner in Texas and our simple, straightforward deal is good for Oncor, its customers and the state."

[CorpRaider]

Who do you think is buying the Bank of New York?  Ted or Todd?

[gfp]

If I had to guess I would guess Todd, but we'll see how big it gets.  Sort of surprising that Buffett never added JPM since he is now limited on WFC size.  And then JPM put Todd on the board of directors without BRK even owning shares.

Who do you think is buying the Bank of New York?  Ted or Todd?

[sleepydragon]

If I had to guess I would guess Todd, but we'll see how big it gets.  Sort of surprising that Buffett never added JPM since he is now limited on WFC size.  And then JPM put Todd on the board of directors without BRK even owning shares.

Who do you think is buying the Bank of New York?  Ted or Todd?

Buffett said he bought JPM in his personal account and that's because berkshire dont have it so there is no conflicts of interest. So he will not be buying jpm with berkshire money. We wont know his jpm trading in his personal account because there will be no filings..

[John Hjorth]

I'm not sure I understand your post here, sleepydragon,

What kind of conflict of interest are your referring to here? If I remember correctly [I may not], Mr. Buffett gave an interview at an Allen session/gathering, where he talked about that he considered WFC a better bank than JPM, but he had bought 1 million shares in JPM personally. [Needless to say, that I have since been puzzled about that statement.] I don't have the actual link.

[RichardGibbons]

What kind of conflict of interest are your referring to here?

Suppose that he bought WFC in his personal account rather than JPM.  And then, suppose after a couple of years, he decided that, amid WFC's recent scandals, the bank had lost a significant part of its competitive advantage and it was time to sell.  He knows that Berkshire selling would likely have a negative effect on price, which would hurt the position in his personal account. So, what does he sell first, Berkshire's stake in WFC or his own?  Since his personal account potentially benefits from front-running Berkshire, that's a conflict of interest.  By ensuring his personal stockholdings don't intersect with Berkshire's he can avoid this issue.

[John Hjorth]

Thanks for that elaboration, Richard,

In that light, sleepydragon's post makes sense to slow me, also.

[Jurgis]

What kind of conflict of interest are your referring to here?

Suppose that he bought WFC in his personal account rather than JPM.  And then, suppose after a couple of years, he decided that, amid WFC's recent scandals, the bank had lost a significant part of its competitive advantage and it was time to sell.  He knows that Berkshire selling would likely have a negative effect on price, which would hurt the position in his personal account. So, what does he sell first, Berkshire's stake in WFC or his own?  Since his personal account potentially benefits from front-running Berkshire, that's a conflict of interest.  By ensuring his personal stockholdings don't intersect with Berkshire's he can avoid this issue.

I know what you're saying, but it's not that simple.

If he buys WFC for BRK and JPM for himself, people can accuse him of conflict of interest because why he bought JPM for himself, is it better than WFC? Why did he not buy WFC for himself, does he not believe it's a good buy? Why did he buy it for BRK then?

I think that's why he said he bought Seritage in personal account, since it would not move needle for BRK, so presumably there's no conflict of interest then. Although you could argue that there is even in that case...

To be clear: I don't care what he bought where much. Just showing that it's not simple to be completely impartial or whatever the word should be.