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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?

#121

Post by skeeter2020 »

runnerup wrote: post #101
bradleyjg wrote: post #92

Earlier quoted context omitted.

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 wha…

People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money there more than they put in banks which are offering >3% APR.

and they're not even making that fractional interest after they pay fees and buy addons.

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

#122

Post by mint2 »

Invictus0 wrote: post #106
runnerup wrote: post #101

Earlier quoted context omitted.

People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money there more than they put in banks which are offering >3% APR.

That's because high yield bank accounts are a phenomenon of the last 6 months and retail by and large hasn't got the message yet. 0.01 is not likely to last forever, and the TBTF banks are losing deposits.

Walked by a chase branch, they had some advertisement for a 4% cd.

So Apparently the big banks are starting to feel the account drain.

Also brokered cds from the likes of Wells Fargo and similar can be 5%.

Big banks definitely are starting to feel it

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

#123

Post by JohnFen »

wesapien wrote: post #16
cyclecount wrote: post #2

All of the rules put in place after 2008 are being ignored; the number of banks in the US pre-2008 financial crisis was about 31k. Now there are close to 3000. After this wave of mergers, there might be around 1000! And a few will be so large that they can make insane bets, betting on risky and novel new investment vehicles that will (maybe initially) pay off handsomely before ultimately failing dramatically. This wi…

You guys should be flipping cars when bank execs didn't get jail time for the financial crisis

I don't think destroying the property of innocent others would help.

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

#124

Post by epolanski »

skeeter2020 wrote: post #120
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 you now have JP Morgan Chase with almost 2.5 TRILLION dollars in deposits, and the current regulators have essentially punted on this issue to the next administration. If they have a liquidity crisis the western world will essentially end.

Ain't that too dramatic?

Yes, I can imagine such a huge bank to cause deep troubles in financial markets and real economy and this impacting the livelihood of people all around the globe.

But saying that "western world" will essentially end when it didn't in face of world wars, grave epidemics and plagues, etc seems definitely too dramatic.

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

#125

Post by mensetmanusman »

gorbachev wrote: post #75
newswasboring wrote: post #52

Earlier quoted context omitted.

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…

[flagged]

Every empire inevitably drowns in its wealth.

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

#127

Post by lesuorac »

bradleyjg wrote: post #110
runnerup wrote: post #101

Earlier quoted context omitted.

People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money there more than they put in banks which are offering >3% APR.

That’s still positive. If they want no risk, that number needs to be negative to cover the costs of holding and moving money around.

Eh, this really seems like moving the goal posts.

The problem with SVB &other is not that they fundamentally were losing money. They just weren't making _enough_ money so they took on additional risk. If SVB hedged the IRR they wouldn't have gone bankrupt; they just would've had less profit.

The banks people want are technically feasible.

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

#128

Post by ehvatum »

skeeter2020 wrote: post #120
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 you now have JP Morgan Chase with almost 2.5 TRILLION dollars in deposits, and the current regulators have essentially punted on this issue to the next administration. If they have a liquidity crisis the western world will essentially end.

> If they have a liquidity crisis the western world will essentially end.

Already had one in 2008. Thankfully, our currency’s value is notional and the fed can print more until such time as the bank run ends.

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

#129

Post by bradleyjg »

oarsinsync wrote: post #113
bradleyjg wrote: post #92

Earlier quoted context omitted.

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 wha…

> 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 That was true when we lived with 0% interest rates. Now, there’s no reason why a narrow bank couldn’t take…

> stick them in with the fed providing 4% interest

Where is this risk free return coming from? You are just saying in more words that the government should give the people what they want.

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

#130

Post by intrasight »

rr808 wrote: post #126

I'm not convinced that USA needs the thousands of banks it does. Most countries survive with a small set of national banks. There seems to be little downside, and makes sense not to have all the duplicated overhead.

I agree. It's very inefficient. And as a result, it personally costs me money - in the form of higher taxes for that very inefficiency. And all banks should be subject to the same regulation. Them saying that they "can't afford it" is just further evidence that consolidation is necessary.
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