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America will soon see a wave of bank mergers?

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

#281

Post by smnrchrds »

Naga wrote: post #215
alberth wrote: post #172

Earlier quoted context omitted.

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 b…

The list only includes "bank"s, that are federally-regulated entities. The biggest provider of banking services in Quebec is Desjardins, but it doesn't appear in the list because technically it's not a bank and it is regulated provincially not federally. Also depending on how you want to count it, Desjardins is either one entity or an ensemble of 210 credit unions. Similarly, ATB gets an honourable mention, but other non-bank providers of banking services such as First Calgary Financial or Vancity (both credit unions) are not shown in the list.

It's interesting that in the US, even small banking service provides are banks. But in Canada, small ones tend to be provincially regulated entities such as credit unions. It's not that small entities don't exist. They just belong to a different list.

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

#282

Post by seanhunter »

alexb_ wrote: post #175
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…

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?

The answer to your question is prices would go down until the yield on the bonds equals the market rate.

Separate nerd note: I think you mean maturity not duration.

The maturity of a bond is the point in the future when holders get back the principal.

The duration of a bond is pretty much the first derivative of price with respect to rates expressed in years. Intuitively it's the number of years (on average) an investor in that bond would need to remain invested for the future value of cashflows from the bond to be equal to their investment in the bond.

https://www.investopedia.com/terms/m/macaulayduration.asp

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

#283

Post by lcnPylGDnU4H9OF »

omgomgomgomg wrote: post #272
lcnPylGDnU4H9OF wrote: post #263

Earlier quoted context omitted.

The commercial bank has something called a "privacy policy" in which they explain that they will choose not to respect my privacy. A government entity isn't allowed to do that. There are actually stricter laws for government invasions of privacy than corporate. To your concern that these three-letter spooks will spy on you: what would they do that they're not already doing? That isn't to excuse the spying; I'm just p…

So are ypu saying the constitution and its privacy protections are totally useless?

I'm intending to say the opposite. My point is exactly that a government-run bank affords citizens this constitution-protected privacy because the bank would explicitly be a government entity.

(Unless you're asking whether the protections are useless against corporations. Then yes, they're useless.)

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

#284

Post by wesapien »

JohnFen wrote: post #123
wesapien wrote: post #16

Earlier quoted context omitted.

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.

We're talking about sins so great that it defines the lives of every younger generation after 2008. It's just as unconscionable as the Iraq war and long term occupation of Afghanistan. Our lives are short and a lot of people have been robbed of time.

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

#285

Post by User23 »

akira2501 wrote: post #279
ehvatum wrote: post #128

Earlier quoted context omitted.

> 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.

> Thankfully, our currency’s value is notional and the fed can print more until such time as the bank run ends. It's value is not notional. If you make more currency then all currency in circulation now has less value. "Quantitative Easing" is simply a way of taxing you after the fact. Worse still if bonds are involved. Now it's a way of taxing your children before they're even born.

> It's value is not notional. If you make more currency then all currency in circulation now has less value.

That's not how pricing works. It's easy to see. Consider the following. Treasury could mint a 10^33 dollar platinum coin[1], stick it in a vault at Fort Knox, and forget about it. At that point the money supply would nominally be almost all in that vault. Yet prices not only wouldn't go asymptotic, they wouldn't even budge. But wait, you say, that's not in circulation. Treasury could easily swap that coin with the Fed for an equal number of reserves. Now Treasury's reserve account is flush, which is surely circulating money. And yet prices still wouldn't budge. Not until Congress appropriated that money to be spent would we start seeing it moving prices, and even then only if Congress designed their spending to do so[2]. It's pretty easy to imagine ways that could be done, so I won't belabor the obvious unless asked to.

The point of all this is that price inflation is everywhere and always caused by an increase of the ratio of money-being-spent:things-being-bought. This is why hyperinflation is always kicked off not by money printing, but rather by a productivity collapse. The money printing only comes afterwards, because it's an effect not a cause. This is also true for wage inflation, which is why US wages have remained flat in real terms since the mid 60s immigration reforms: the labor supply has been grown as fast as the demand for labor.

[1] This authority exists under current law.

[2] For a counter-example, if Congress passed a law appropriating 10^33 dollars for the Social Security Administration to buy gold from citizens in any amount they desired at a price of $20 per ounce, the price of gold wouldn't budge a cent on account of it, despite an absurd amount of money on the buy side of the gold order book.

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

#286

Post by akira2501 »

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…

> Theyre just skimming middle man between the government and end consumer.

You're thinking of the "federal reserve" as "the government." This is a tempting but extremely flawed point of view.

> If youre in trouble with the irs or the law, the government will have all the insight they request.

These institutions make mistakes. They're also not immune to corruption or politics themselves. Government agents have qualified immunity. Do you really want to bank with someone you essentially cannot sue?

> I know the interest rate should be set by banks and not the politicians, but yeah, is that really it?

Rates should be set by the _market_. Which would be easier if currency were backed by anything other than _fiat_. You are in a tarpit, going further down is not the secret way out.

> neutral like the irs

What makes you think the IRS is "neutral?" Or presuming that's true, given this new responsibility, how are they capable of maintaining it?

Finally.. wouldn't something simpler, like just reimplementing Glass Steagall be the better idea? Let's make "consumer banks" and "investment banks" different and separately regulated again.

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

#287

Post by singleshot_ »

lobochrome wrote: post #36
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

Fed accounts for everyone.

So many people in this thread want a narrow bank and so few of them have treasurydirect accounts. It makes me wonder if maybe I’m the one who is missing something?

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

#288

Post by opportune »

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…

The thing that private banks are supposed to do is compete on accurately assessing and pricing risk (for lending). The better they do at this, the lower the rates they can offer on loans - more demand for loans - and higher returns they can offer to depositors - more supply for lending - with higher profits for themselves. They compete on this spread in a market.

I do not think the government would be good at doing this at all. Assessing risk is very hard, and the competition is necessary for it to benefit consumers. Politicians could pass extremely harmful or stupid policies for populist purposes.

That said, because banks have an oligopoly on “give me a place to digitally hold money” and in practice more money than they could ever really productively lend (why do you think interest rates have been trending down so low historically?), they’re not doing a great job at either side.

That’s why I think the government should implement only narrow banking where they don’t lend, just manage the table of accounts and amounts, and let banks compete against that for deposits. You would still move money to a bank for yield, provided it’s good enough, and banks would still be able to lend and stimulate the economy. Yes they’d have less capital and be able to lend less, which may require structurally higher rates (which may actually be a good thing in the long run- a lot of lending and low rates are just going towards bidding up fixed assets like land or leveraged stocks, and not actual economic activity) but that would balance out with higher yields on deposits.

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

#289

Post by IAmGraydon »

senectus1 wrote: post #54

These banks are counting on "Too big to fail"... and the politicians will back it. To back it they will print money, which will devalue the currency and drive up inflation. this is a sick and twisted collapse of multiple economies. It has only one direction. down. its not too late to stop it, but nobody will, because the cost to those in power will be too great.

>These banks are counting on "Too big to fail"... and the politicians will back it. To back it they will print money, which will devalue the currency and drive up inflation.

Bailing out depositors isn't going to increase inflation - you're just giving people the same amount of money they already have. The big problem with it is that it prevents the natural process of wealth destruction from occurring, so it may just drag out inflation for longer.

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

#290

Post by [deleted] »

ericpauley wrote: post #268
drivebyhooting wrote: post #131

Earlier quoted context omitted.

There’s no free lunch. You will be taking additional risk by doing this even if the downside seems unlikely or remote.

If the loan % is lower than a savings account then there is no/0/zero risk, so long as you stay under FDIC limits. Your deposit earns money and is backed by the full faith and credit of the United States government .

[deleted]
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