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.
I’m sure all the spooks in the three letter agencies will totally keep their hands out of that cookie jar.
All the commenters here that think the federal government should directly provide their banking services are going to be in for a rude awakening if it ever actually happens.
> What people are now asking for is unlimited insurance, which encourages risk takings amongst banks Except that when a bank is liquidated, the shareholders get zeroed out , and the executives get their money clawed back, which encourages banks to not risk-take. As a depositor, this sounds fine to me. I don't benefit from banks doing stupid, risky things, and I shouldn't suffer from it either. Raise the capital requi…
The problem is not what happens to the shareholders (they get zeroed out the same way that shareholders of other failing companies would be), but what happens to the depositors . The rules, as written, say that deposits above $250k can be wiped out. The rules, as the government applied to the SVB, made large depositors whole. So we have the worst of both worlds: no depositor guarantee de jure (so depositors bailed an…
I think the priority at the federal level is still in at least maintaining a facade of banking system stability. It’s very rare that the bank not only becomes insolvent but also loses all its value. Risky investments to a bank are not really considered super risky elsewhere and the investments still hold value, albeit less if they are trying to liquidate. The problem is when banks are unable to maintain enough cash which happens when they over-invest or when their returns just barely keep up with inflation. There is usually plenty of money that is recoverable, with time, to make depositors whole. The “bail out” concern is a red herring for the actual problem: market consolidation. Larger banks effectively write IOUs to each other depending on who owns who after each day of ACH, wires, deposits, and withdrawals, while smaller banks pay in cash. There is additional burden on, usually, medium-sized banks who need to both maintain large cash reserves but also cover the cost of operations.
That was what Occupy Wall St and Tea Party movements were. Remember that? Before each of them got infested with social-issue parasites of each pole, both were populist reactions to financial injustices.
Occupy was suppressed by the entire police state, coordinated at the federal level under the FBI and DHS [0]. [0]: https://www.theguardian.com/commentisfree/2012/dec/29/fbi-co...
I feel like the most significant cause of Occupy's burnout was the fact that it was so poorly organized and had no concrete goal. I don't recall any specific legislation or reform that they were calling to enact and there was a cacophony of voices each calling for some kind of societal revolution. Eventually the local Occupy demonstration turned into a homeless encampment with some signs propped alongside the roadway. I certainly won't deny government meddling but I honestly think the movement was doomed from the start.
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…
That’s not how the Fed interest rate works. Yo can’t just “deposit” your money with the Fed and have it pay you interest. What you can do is buy bonds. These bonds have a price and maturity date. When the interest rates keep increasing the bonds which pay less interest become cheaper. So you can’t just “withdraw” what you deposited. You have to sell what you “bought” but for much less than you paid, so you go under.
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:…
More importantly, there are really only five major banks in Canada - RBC, TD, Scotiabank, BMO and CIBC. National Bank is a close #6, but is really only big in Quebec. Those five are the lion's share of the banking industry, especially when you consider that they own a number of the other banks (Scotiabank owns Tangerine, for example). The other banks are niche regional banks or for specific purposes (i.e. Home Bank business is largely selling GICs and lending mortgages, without much else).
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
As if the entire end goal of capitalism wasn't monopolization of every single product and service.
Welcome to reality where "competition" and "free market" are just buzz words meant to fool the naive populace.
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:…
The claim/lie that there were "over 30,000 US banks just 10-15 years ago, it's now less than 3000, and they are all about to fail" is disinfo that is being pushed hard on twitter and reddit. On reddit it seems to be r/Sino regulars brigading financial subreddits but on twitter it seems to be accounts that are very supportive of a former US president.
There's no "should" because there's no high authority in humanity which decides what should and shouldn't exist. Banks exist because some people want to found banks and then other people want to use their services. The only way to prevent this from happening is to threaten violence or threat of violence to either of these people. The better question would be, why would anyone use violence to force his opinion on othe…
> The only way to prevent this from happening is to threaten violence or threat of violence to either of these people. That's a weird view. We could also just, you know, vote away banks. I'm not sure why a centralized bank would result in violence.
OP is making a dumb libertarian argument basically saying "there's nothing stopping people from doing what they want except the threat of force/violence" (which is trivially true, and the mechanism by which any group of people - even democratic societies - imposes their will on insiders or outsiders), and "do you really want to use THE THREAT OF VIOLENCE to prevent me from STARTING A BANK???" as if it's different from the enforcement of any law. OP questions the use of "should" uncharitably, because the original comment's unstated assumption is clear - society "should" be set up to tradeoff freedom and minimizing collective harm. Violence is not the only form of harm; unregulated banking can obviously cause harm in the society (starvation was pretty harmful in the US during the Great Depression), and so it's valid to question whether or not society should consider how the benefits of private banking (with any amount of regulation) trade off with a public alternative.
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
If banks are going to be private then the regulation of them needs to be the inverse of what it is now. Regulation now is: You can do anything you want except X,Y, and Z.
It should really be: You can only do A, B, and C and in the ways we tell you.
> This is just going to make the banking system more concentrated More concentrated. More highly regulated. Closer to being absorbed by the state. I'm not saying that's necessarily going to happen someday. But that is the direction it is (and has been) moving.
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?
Ever heard the term "CorpoNation"?
I did, in a old RTS game called Metal Fatigue. Was pretty fun for a while.