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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?

#91

Post by lvl102 »

allie1 wrote: post #76
lvl102 wrote: post #45

People simply got used to not getting paid interest for their deposits. Bank business model needs to change or there will be new business models where deposits are fully guaranteed. That’s probably what the crypto people should have done but sadly they are too stupid (and greedy/scammy) to take on the traditional model.

There are exceptions. Ally bank has been paying reasonable yields on deposits, being a digital bank with lower operating costs. The bank model works, it’s the “too big to fail” model that is broke. The one upside of TBTF banks is you forfeit any deposit earnings to get “insurance” on the full amount.

What we need is a “boring” banking model where deposits are fully guaranteed by a bank. No lending. In digital age, that should be ridiculously easy to do.

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

#92

Post by bradleyjg »

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

Banking is fundamentally broken. People want zero risk, demand deposits that pay interest. There’s no business model that can provide that.

It would be perfectly possible for a business to provide zero risk demand deposits—-but the business would have to charge customers for its custodial operations rather than making money by writing loans.

Of course because we live in times where no one can tell the people that what they want is impossible and ridiculous, we instead have a house of cards with various parts of the government (including parts we pretend aren’t the government) eating the risks.

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

#93

Post by digging »

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.

When corporations write the laws that regulate them, and they buy the politicians who will enact those laws, the line around what defines "the state" is a bit fuzzy. (And that's not speculative, it happens all the time.)

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

#94

Post by SllX »

jghn wrote: post #68
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.

that’s fine, but if we’re going that way then people shouldn’t be getting rich running them by socializing the risk and not the profits

Or we can just not socialize the risks to lenders. I mean that’s always an option.

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

#95

Post by Vervious »

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.

No no no no no it'll run it to the ground like the USPS, or, gasp, the Israeli postal service (which, coincidentally, also lets you open bank accounts). (We actually have it super good in the states with door to door package delivery. It could get so much worse.)

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

#96

Post by lockhouse »

passwordoops wrote: post #89
lockhouse wrote: post #86

Earlier quoted context omitted.

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

Yes but in theory the banks are under the pressure of competition. Anything that is moved under the umbrella of the federal government essentially becomes a monopoly.

I can switch banks in less than an hour, it takes months to years to switch countries.

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

#97

Post by [deleted] »

sclarisse wrote: post #90
WillAdams wrote: post #83

Earlier quoted context omitted.

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 t…

[deleted]

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

#98

Post by digging »

newswasboring wrote: post #67
mtlmtlmtlmtl wrote: post #66

Earlier quoted context omitted.

And what's the situation now? Your country could gradually he heading towards a two party system.

No we are heading to a one party system. But that has nothing to do with first past the post. There are several historical and social reasons for that.

> But that has nothing to do with first past the post.

You could be right, but how do we know the polarizing effect of FPTP isn't contributing to this change?

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

#99

Post by throwway120385 »

sclarisse wrote: post #90
WillAdams wrote: post #83

Earlier quoted context omitted.

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 t…

I would actually be fine with this if the mandate is simply to hold deposits and lend deposits with appropriate risk controls. But if the goal is to use that control to accomplish political ends like suppressing wage growth or providing stimulus then I don't think it's a good idea. If the Treasury wants a loan from the Fed to do these things that should be how it's done.

Student Loan forgiveness is another thing entirely because those loans are held in public corporations, and if congress wants to use tax money to forgive them they can. You can already get some or all of your loans forgiven in very limited circumstances such as paying them for 20 years without paying them off, or if you teach at a public school for more than 5 years.

20 years of repayment at 300-600 a month is pretty crippling. That's like buying a new car on a loan every 3-5 years. Even income-based repayment has limits on how small your payments can be.

Student loans are also statutorily impossible to discharge in bankruptcy, unlike every other form of debt.

So I think we need to do something, and it seems like the simplest thing to do is make them the same as other loans. We should allow you to declare bankruptcy and discharge your student loans. This won't fix a lot of the knock-on effects but it will get people out from under the loans.

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

#100

Post by digging »

tormeh wrote: post #63
Waterluvian wrote: post #50

Earlier quoted context omitted.

Canada has like 40 banks and strong regulation has kept them out of crises like in 2008. What’s the right number of banks per capita?

Easy to keep banks out of crises during good times.

That seems a bit backward when banks can so easily be the cause of bad times.
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