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America will soon see a wave of bank mergers?

economist.com

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Re: America will soon see a wave of bank mergers?

#51

Post by landoftheice »

mjburgess wrote: post #31
passwordoops wrote: post #20

I've said it before, I'll say it again - "too big to fail" should be recast as "too big to exist" I'm not sure what the best solution is here, but making the big banks even bigger is not it. This is just going to make the banking system more concentrated and no concentrated market is good for anyone. Least of all because the past decade+ has set the precedent that the banks will be bailed out... If they're big enough

Well, I think we've discovered banking is a "public utility" -- things which are too big to fail.

[dead]

Re: America will soon see a wave of bank mergers?

#52

Post by newswasboring »

gorbachev wrote: post #46
newswasboring wrote: post #32

Earlier quoted context omitted.

America needs a leader who can inspire people to work with each other even when they don't agree on everything. I am quite sure you can build a significant coalition around financial issues, maybe even bigger than a super majority. But somehow people are not willing to work with each other unless they pass each other's purity tests. Thus, nothing changes and the status quo wins every time.

That will never happen in our lifetime. Democrats can't do it, because Republicans will never cooperate with a Democratic Party president. Republicans can't do it, because they will continue to nominate a culture warrior whose only job is to fight wokeness, so they aren't even interested in it. This thing will keep escalating, relatively slowly, until it finally crosses the line and even the Republicans will figure o…

I agree, if this was to happen it will have to happen with a third party. But America seems to be allergic to any third parties.

For the longest time I used to think that the two party system is like a law in America or something. Like China has a one party system. When I learned that it isn't, i spent a considerable amount of time confused as to why then in all political discourse is the two party system so... enshrined. Some say if you listen to me closely, I'm still confused about this. I come from a country which routinely has 20 parties in different levels of government each with significantly different agendas (or at least we used to, sigh...). Why is this not the case in America? It seems to me that everyone is dissatisfied with their party, yet they don't want to support anything else. For a country which prides itself in its entrepreneurship and startup culture, the reluctance in supporting innovation in politics is so surprising.

Edit: btw, i disagree with you that Republicans will "start" to hold their leaders accountable. From an outsider perspective, the Republican party seems to be achieving their targets and GoP members are more active than Democratic party members. I may disagree with most of their social and financial goals, but I will acknowledge they are effective and there are severe consequences on failure.

Re: America will soon see a wave of bank mergers?

#53

Post by jliptzin »

It’s too late now, but the FDIC should just guarantee all deposits with no limit. If they did it with SVB they should do it for every other bank too moving forward. It is ridiculous to expect the average person to dig into bank balance sheets and try to determine whether their bank is managing risk properly.

That would have prevented these runs, which counterintuitively means fewer FDIC payouts, not more. Then couple that with stricter rules to prevent risky gambles funded by deposits.

Re: America will soon see a wave of bank mergers?

#54

Post by senectus1 »

These banks are counting on "Too big to fail"... and the politicians will back it. To back it they will print money, which will devalue the currency and drive up inflation.

this is a sick and twisted collapse of multiple economies. It has only one direction. down.

its not too late to stop it, but nobody will, because the cost to those in power will be too great.

Re: America will soon see a wave of bank mergers?

#56

Post by senectus1 »

jliptzin wrote: post #53

It’s too late now, but the FDIC should just guarantee all deposits with no limit. If they did it with SVB they should do it for every other bank too moving forward. It is ridiculous to expect the average person to dig into bank balance sheets and try to determine whether their bank is managing risk properly. That would have prevented these runs, which counterintuitively means fewer FDIC payouts, not more. Then couple…

with what money will they guarantee all deposits? Governments dont have much money, they have taxes. when they can't tax their current voters they tax future voters by printing money.

If you told the banks that you will protect their business regardless of what corrupt, stupid or greedy behavior's they practice... what do you think they'll do?

this is so very screwed up.

Re: America will soon see a wave of bank mergers?

#57

Post by allendoerfer »

Semaphor wrote: post #43
lmpdev wrote: post #3

I know there are regulatory rules which partially explain the fragmented banking sector in the US compared to other nations: four example in Australia we only really have 4-5 proper banks Are there other reasons that small banks have seemed to thrive in the United States but no where else?

> but no where else AFAIK we are also an outlier, but Germany has quite a few banks: > As of December 2022, there were 1,389 credit institutions in [Germany] -- https://www.statista.com/statistics/350502/eurozone-germany-... edit: US (FDIC insured only) 1 bank per 78,680 people, Germany 1 bank per 60,670 people (afaik every bank is essentially FDIC insured here), rough numbers from 2020-2023 wikipedia and statista.

Germany is different, because of those 1,389 credit institutions, 359 are Sparkassen [0], which are county- and state-owned. Sparkassen are for profit, but are also supposed to provide basic financial services to small businesses in every county of Germany, which is why their number is so inflated. They are consolidating, closing branches and buying each other, but in a sense can already be counted as 1 bank.

There are another 737 Volksbanken & Raiffeisenbanken [1], which I think you would call credit unions in the US, and are owned by their members.

Both Sparkassen and Volksbanken have a complicated associated with bigger banks and service providers like asset managers (Landesbanken, DZ-Bank, LBS, Deutsche Leasing, Union Investment, etc.). It is just, that the number inflates, because of their upside-down ownership structure. The branches own the parents.

[0]: https://www.dsgv.de/sparkassen-finanzgruppe/organisation/ver...

[1]: https://www.bvr.de/Presse/Zahlen_Daten_Fakten

Re: America will soon see a wave of bank mergers?

#58

Post by jillesvangurp »

frankfrankfrank wrote: post #12
lmpdev wrote: post #3

I know there are regulatory rules which partially explain the fragmented banking sector in the US compared to other nations: four example in Australia we only really have 4-5 proper banks Are there other reasons that small banks have seemed to thrive in the United States but no where else?

I would say the fact that banking is not something that is legally the authority of the federal government; even though states have seemingly acquiesced to their role and right eroding and being taken from them as the federal government persistently oversteps its bound and becomes ever more authoritarian. It’s something even most Americans don’t even understand anymore, let alone foreigners or immigrants; that the US…

When banks collapse, it definitely is a federal emergency. That's the whole problem. The 2008 crisis was basically a lot of banks needing to be bailed out and people demanding that something should be done (by the powers that be, i.e. the feds). The current banking crisis is relatively minor in comparison but a nice wake-up call that banks can and do collapse if you don't regulate them and that they can do a lot of damage when they do.

What you are stating isn't that black and white. The US constitution is only worth as much as governments and judges are willing to enforce. And where it isn't very explicit, that's mostly a very political thing. In the case of banks means that a lot of power has actually been granted to federal authorities over time. All without changing a line of text in the constitution. There's been a bit of a cycle of de-regulation followed by crisis induced new regulations happening of course historically. And you might argue things are currently leaning towards more regulation rather than less given the apparent failure of the sector to self regulate and sort things out themselves.

Re: America will soon see a wave of bank mergers?

#59

Post by jliptzin »

senectus1 wrote: post #56
jliptzin wrote: post #53

It’s too late now, but the FDIC should just guarantee all deposits with no limit. If they did it with SVB they should do it for every other bank too moving forward. It is ridiculous to expect the average person to dig into bank balance sheets and try to determine whether their bank is managing risk properly. That would have prevented these runs, which counterintuitively means fewer FDIC payouts, not more. Then couple…

with what money will they guarantee all deposits? Governments dont have much money, they have taxes. when they can't tax their current voters they tax future voters by printing money. If you told the banks that you will protect their business regardless of what corrupt, stupid or greedy behavior's they practice... what do you think they'll do? this is so very screwed up.

Did you read my last sentence? Make the law such that bank failures can only occur in situations of outright fraud/criminal behavior. Most failures occur because of bank runs or stupid/risky bets, unlimited FDIC takes care of runs and stricter rules would stop bad risk management.

Re: America will soon see a wave of bank mergers?

#60

Post by nicoburns »

newswasboring wrote: post #52
gorbachev wrote: post #46

Earlier quoted context omitted.

That will never happen in our lifetime. Democrats can't do it, because Republicans will never cooperate with a Democratic Party president. Republicans can't do it, because they will continue to nominate a culture warrior whose only job is to fight wokeness, so they aren't even interested in it. This thing will keep escalating, relatively slowly, until it finally crosses the line and even the Republicans will figure o…

I agree, if this was to happen it will have to happen with a third party. But America seems to be allergic to any third parties. For the longest time I used to think that the two party system is like a law in America or something. Like China has a one party system. When I learned that it isn't, i spent a considerable amount of time confused as to why then in all political discourse is the two party system so... enshr…

It's the First Past The Post voting system that leads to two parties.
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