Hacker News Reader

Comment by kirkbackus | Hacker News Reader

In the attached article

> After hovering around record lows for much of the pandemic, consumer delinquencies are rising across the industry.

> It lost slightly more than $1 billion in 2021 and $783 million in 2020, after accounting for operating expenses and money set aside to cover possible losses on loans

That seems like an enormous amount of money to support buy now and pay later

View on HN

Apple has enough cash reserves to be able to be a bank themselves, but I guess are much too smart to use their own money.

Is the buy now, pay later all of what this stems from? I have never looked into it, but I assumed they were also backing the Apple credit card which I consider totally different from each other.

It's more than that. Consider Apple's strongest advantage, it's brand.

If Goldman is the one handling the lending, it is also the one sending you to collections.

The PR damage to Apple's brand can be significant

Goldman considers its brand a key asset.

“””Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. “””

https://www.goldmansachs.com/our_firm/investor_relations/fin...

It’s the truth.

The retail bank was a mess. It’s a stepping stone for Solomon to disrupt the trading culture and take control of the bank from the investment bank. It costs a lot to set up a retail bank, and the political will was there to start but not to finish. The politics around the retail bank was hyper toxic, with a classic us and them mentality. The established tech and back office were marginalized and the retail bank tried to build it all themselves but learned the hard way very late those groups exist for a reason - regulatory and security bars are super high and can’t be achieved by hubris alone. Apple had extremely aggressive asks of the technical stack, they outsourced a lot of core stuff to SaaS finserv at a high margin, and a bunch of other issues. Finally the timing of it all was awful. They started in a super low rates cash flush world and things have gotten harder everywhere for them.

Source: I was there

Apple's reputation is focused on its consumer business. Financial news is unlikely to affect consumers' perception of them.

I doubt that Apple's reputation would be hit on this unless Goldman launched a PR battle to get Apple to let them out of the deal.

But Apple could take it to an 11 too. If they finance your equipment and you fall behind on your payments, guess whose equipment just went into lock-out mode... Apple could then allow the device to be returned to an Apple Store, and credit will be applied to the account. A voluntary return policy, only throw in a carrot of if you provide a memory stick, they'll make you a copy of the data for a small nominal fee.

That will most definitely destroy the brand

Ford, Chevy, Toyota, Honda, et al. repo cars daily, and their brands are not hurting. People know when they can't make payments that their collateral is likely to be collected.

I'm not saying I'm for them doing this or anything, but just taking the dystopian concept to a logical completion. We've already seen where self driving cars have been discussed repossessing themselves, so this is just the natural extension of the same concept. This forum tends to think that places like FB, Googs, etc should have a very negative brand due to the data collections, but the masses don't give a damn.

Those are typically dealers

Those are typically finance companies, so dealers are no where near repossession. Each of the big auto makers all have their own financing companies, so it very much is the manufactures.

I believe that remotely disabling your car if you don't pay has been an established practice among "buy here pay here" dealers for many years. It's an "innovative" way to lend to people who have bad or no credit.

On the other hand, I've never heard of it spreading outside that market segment.

It would be news to me if the major manufacturers finance arms have the capability and are keeping it on the down low.

What's really shocking is that this number is post provision for future losses, which is a non cash accounting charge that the media often uses to make banks look worse. These are real losses.

Wait to see what the realized losses are. Banks are kinda infamous for huge preemptive write downs, then discovering "profits" when the loans pan out.

I think it is that, I assume "money set aside to cover possible losses on loans" means income statement provision for future losses.

The retailers love it though.

I even Amazon is getting in on it.

Reply on news.ycombinator.com