Bank charging 2% on this flow is criminal, in the sense that interest rates are nearly negative, so 2% is practically 10, 100X the rates banks can earn otherwise. It's basically free money shoveled into banks, a massive boon.
While I agree that the fee might be high, the comparison between the two is is a false equivalency.[1] A transaction fee is something completely different from an interest fee. The first is a one time fee while the other is continues over time.
No. whether I charge you a fee through an explicit transaction cost, or I charge you based on a hidden spread to some rate, it’s still revenue from the perspective of banks. It’s a common trick used by consumer banks (to masquerade interest based spreads as no fee loans).
Why would annual interest rates be a relevant baseline for a transaction fee?
Because banks borrow short, lend long. This is an exogenous fee generating bonanza for banks. It’s not that much different from someone selling you masks at a steep price. issuing these loans do not cost banks anywhere even close to what they charged.
If a business were to go and get one of these "nearly negative" loans from a bank, what would they pay in fees?
Do you know?
If they're charging interest, their fees would be a lot higher than 2%.