Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

America will soon see a wave of bank mergers?

economist.com

Post reply on HN
Print view View original

81–90 of 451 posts

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

#81

Post by vkou »

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

... Except that the too-big-to-fail banks are under more stricter capitalization rules than the banks that are failing right now, which is why the small-medium capitalization banks are going through a bloodbath.

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

#82

Post by beiller »

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.

The government controls the amount of dollars. It's not paying back out of coffers, just print the money. But if you really want to, you could cover the deposits from FDIC which is insurance paid by that bank. Secondly we're not bailing out banks. We'd be bailing out the depositors. The banks and their stock is free to go to zero, everyone is fired, etc. I think you've conflated two different things.

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

#83

Post by WillAdams »

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.

Fine, then they should be non-profit credit unions.

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

#84

Post by kirbyfan64sos »

jmyeet wrote: post #38

Consider these three pieces of information: 1. There is not a bank in existence in the US that could survive a bank run where 25% or more of the deposits leave. Not even JP Morgan Chase; and 2. There's a lot of evidence to suggest that the bank run on SVB was created by the direct actions of relatively few people, most notably Peter Thiel; and 3. The FDIC usually solves such bank runs by seizing the bank and selling…

This falls apart a bit when you consider that several larger banks did try to prop up First Republic for a bit, specifically because:

> the FDIC is funded by banks and receives no appropriations from Congress

So banks going down can certainly cause other banks money, too.

That being said, the "significant discount" is usually because, when you acquire the assets, you also acquire the bank's liabilities, and AIUI roughly speaking you're paying the difference between what you gain and what you lose in the process. More specifically, the FDIC helped fund JP Morgan's acquisition of First Republic because, if JP Morgan simply acquired the assets & liabilities directly, they would not be enough liquidity for it to be safe.

I.e. acquiring a smaller bank has some advantages but also some downsides, and it also destroys trust in the system which hurts the big banks too...so it's not really something that's exclusively beneficial and definitely not worth trying to trigger intentionally.

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

#85

Post by WeylandYutani »

vkou wrote: post #81
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

... Except that the too-big-to-fail banks are under more stricter capitalization rules than the banks that are failing right now, which is why the small-medium capitalization banks are going through a bloodbath.

I listened to an interview with an expert who explained that the US specifically lobbied that small banks are exempt from Basel 3 regulations.

Europe doesn't have 5000 banks they all merged decades ago.

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

#86

Post by lockhouse »

gonzo41 wrote: post #80
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

Kinda makes sense for the government open a commonwealth bank of sorts and allow people to hold deposits against the government directly. Cut's out a layer of rent seeking markets.

Hard disagree, the federal government already has too much power. Giving them that sort of access and direct control over personal financial assets would be widely abused.

The government and those who work for them are not your friends. The power you give them can and will be abused and will never be returned to the people without great difficulty and probably bloodshed.

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

#87

Post by metajon »

nonethewiser wrote: post #34
brianmcc wrote: post #29

Earlier quoted context omitted.

Also closer to absorbing the state. I'm not a tin foil hat person, but corporations growing larger than nation states just doesn't seem remotely far fetched. Which corporation will be first to sit at the UN table?

But who is creating the regulation? The answer to that is funny. It is literally the state, which is to my point, but it is also shaped by the banks, which is to your point.

Or there is a new term that subsumes them both: the "regime." And with this small substitution, and a slight modification to the source material we see that the "absorption" may already be complete.

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

#89

Post by passwordoops »

lockhouse wrote: post #86
gonzo41 wrote: post #80

Earlier quoted context omitted.

Kinda makes sense for the government open a commonwealth bank of sorts and allow people to hold deposits against the government directly. Cut's out a layer of rent seeking markets.

Hard disagree, the federal government already has too much power. Giving them that sort of access and direct control over personal financial assets would be widely abused. The government and those who work for them are not your friends. The power you give them can and will be abused and will never be returned to the people without great difficulty and probably bloodshed.

Thing is neither are the oligarchs who run the financial system. Take a look at the labor struggles of the early 1900s in the US - that wasn't people struggling against a government using their army, it was people struggling against private ownership turning hired militias against their employees.

The problem is concentrated power. Whether it's government or private, concentrated power in anything is bad

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

#90

Post by sclarisse »

WillAdams wrote: post #83
mjburgess wrote: post #31

Earlier quoted context omitted.

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

Fine, then they should be non-profit credit unions.

No, they’ll be replaced by something like The People’s Ledger, as proposed by Comptroller of the Currency nominee, Saule Omarova, in her paper of the same name. (She was nominated by President Biden in 2021. Not just a random kook!)

Under such a regime all banks will put customer funds at the Fed, which will be the sole entity to allocate credit, with banks as mere customer service frontends. It will use that power to allocate credit to advance nakedly political goals, with much less attention paid to minutae like risk, ability to repay, and other pesky economic concerns the free market would elevate. We’re already forgiving student loans; watch the People’s Ledger forgive mortgages!!

And when that bank fails it will just fall back on moneyprinting.

Post reply on HN