3-6-3 Rule: Slang Term For How Banks Used to Operate

The 3-6-3 rule is a slang term for how banks used to operate. It refers to the idea that banks would take deposits for three days, lend out money for six months, and then collect interest for three years. This rule was based on the idea that banks could make a profit by taking advantage of the difference in interest rates between short-term and long-term loans.

The 3-6-3 rule was first popularized in the early 1900s by J.P. Morgan, who was one of the most influential bankers of his time. Morgan believed that banks should focus on making money by lending money to businesses, rather than by investing in stocks or other risky assets. He also believed that banks should keep a large amount of cash on hand to meet the demands of depositors.

The 3-6-3 rule was widely adopted by banks in the United States and Europe. However, it began to break down in the 1970s as interest rates became more volatile. Banks were no longer able to make a profit by lending money for long periods of time, and they were forced to hold more cash on hand to meet the demands of depositors.

The 3-6-3 rule is no longer used by banks today. However, it remains a popular term for describing how banks used to operate.