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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?

#171

Post by Laaas »

kornhole wrote: post #158
omgomgomgomg wrote: post #152

Why exactly should banks be private companies at all? Theyre just skimming middle man between the government and end consumer. Sure, the government would know your bank balance and spendings, but that could be worked around If youre in trouble with the irs or the law, the government will have all the insight they request. Sounds crazy? We the people had to bail them out and never get anything of their profits. Too bi…

Yes banks should be better regulated to avoid letting them make risky moves. That aside, many regional banks rather than a centralized government controlled bank is critical to our freedom. Government controlled banks or CBDC will give government total surveillance and control over us since you cannot do much without money.

Technically, the CBDC could be a privacy coin, albeit very unlikely.

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

#172

Post by alberth »

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…

Your numbers are wrong.

1974: ~14,000 banks

2008: ~7,000 banks

2023: ~4,000 banks

This has been a steady decline since 1974 (not 2008) in the US.

https://banks.data.fdic.gov/explore/historical?displayFields...

As a comparison, Canada only has 34 banks.

https://en.m.wikipedia.org/wiki/List_of_banks_and_credit_uni....

EDIT:

In case anyone is curious, these are the credit union numbers.

1981: ~7,000 credit unions

2010: ~7,000 credit unions

2023: ~5,000 credit unions

https://ncua.gov/about/historical-timeline

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

#173

Post by basicecon101 »

bootwoot wrote: post #165
oarsinsync wrote: post #113

Earlier quoted context omitted.

> 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…

That's exactly what Silicon Valley Bank did. While federal bonds are nearly risk free in terms of default, they still suffer from interest rate risk -- that is, they may lose significant value if interest rates rise. In the case of SVB, US treasury bonds lost enough value to make the bank insolvent.

Yes, but because this poster thought this arbitrage was obvious and would solve all our problems, the political issue of banking regulation remains. It is a Dunning Kruger trap.

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

#174

Post by now__what »

tester756 wrote: post #114
siliconc0w wrote: post #107

The big banks are terrible if you fall outside their algorithmic expectation. My partner and I were trying to get a mortgage and despite near perfect credit, large incomes, etc our apps were auto-denied because I never opened multiple open loan lines. Never needed them, just used CCs I immediately paid off for points as I always had a job/savings and bought cheap used cars for cash. We eventually got one but it took…

Is this why some people recommend to take loan for something that you have money? Like - you wanna spend 30K on a car and you have it in cash? take loan you'll lose a some $$, but you'll be building your history.

You also want to consider whether it's more valuable to you personally to have that cash in hand. Are you going to roll it into another investment? Then maybe a low enough interest rate on the loan will put you out ahead despite paying interest.

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

#175

Post by alexb_ »

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…

You are exactly describing what all of these banks did.

What happens to the value of 4% bonds if interest rates go to 6%? What about if people want their money back before the bond duration is up, so you have to sell the 4% bonds in a 6% environment?

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

#176

Post by fowtowmowcow »

omgomgomgomg wrote: post #152

Why exactly should banks be private companies at all? Theyre just skimming middle man between the government and end consumer. Sure, the government would know your bank balance and spendings, but that could be worked around If youre in trouble with the irs or the law, the government will have all the insight they request. Sounds crazy? We the people had to bail them out and never get anything of their profits. Too bi…

Who should set the rate on interest for loans?

Just one entity without any other consumer options?

What happens if the government makes a ton of bad loans that never get paid?

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

#177

Post by renewiltord »

Before you read any of the comments, you would be better served learning what a GSIB is and the constraints on them, the role of the FDIC, bond pricing, and what regional banks can bring to the table.

GPT-4 answered quite well, but Google is a good supplement. This comment thread appears to be software engineers saying things about stuff they don't understand.

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

#178

Post by quest88 »

lcnPylGDnU4H9OF wrote: post #162
kornhole wrote: post #158

Earlier quoted context omitted.

Yes banks should be better regulated to avoid letting them make risky moves. That aside, many regional banks rather than a centralized government controlled bank is critical to our freedom. Government controlled banks or CBDC will give government total surveillance and control over us since you cannot do much without money.

In the US, a government-controlled bank would have stronger privacy because privacy is enshrined in law. Specifically my government cannot snoop on certain things. If the government kept all of my banking records, they wouldn't be able to legally access them. Currently, they can just use taxpayer money to purchase these records from the corporations who gather them.

Apply your logic about laws to private banks. Make it so private banks have to adhere to some new law. Same outcome.

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

#180

Post by manojlds »

fowtowmowcow wrote: post #176
omgomgomgomg wrote: post #152

Why exactly should banks be private companies at all? Theyre just skimming middle man between the government and end consumer. Sure, the government would know your bank balance and spendings, but that could be worked around If youre in trouble with the irs or the law, the government will have all the insight they request. Sounds crazy? We the people had to bail them out and never get anything of their profits. Too bi…

Who should set the rate on interest for loans? Just one entity without any other consumer options? What happens if the government makes a ton of bad loans that never get paid?

Why can't that be the central bank? We don't have private courts?
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