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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?

#291

Post by stanleydrew »

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 .

The loan will usually be at a fixed-rate, while the interest paid on your deposits will fluctuate. So there is still risk that your net interest margin will go negative at some point.

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

#292

Post by fowtowmowcow »

danaris wrote: post #193
fowtowmowcow wrote: post #185

Earlier quoted context omitted.

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

The government would seem to have every recourse to collect.

Hard to collect money on unemployed and dead.

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

#293

Post by brodouevencode »

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

The American banking system is highly regulated in spite of some of the things you'll read here and other places. It's very hard to start a bank, and banks only allow some products because of regulation. The problem comes when the politicians slide into the back pocket of the bank execs who are all too happy to keep the status quo. In that respect the politicians are just as guilty as the bank execs.

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

#294

Post by lxgr »

beiller wrote: post #273
lxgr wrote: post #116

Earlier quoted context omitted.

So you're suggesting we should let commercial banks run as risky a business as they like, pocket the profits if it works out, and pay for the deficits using newly printed central bank money if it doesn't? > The banks and their stock is free to go to zero, Sure, but what about the dividends and bonuses already paid out from the times it worked out in the risky banks' favor? You're suggesting a government/central bank…

Well maybe we can claw back the bonuses. You're right and I did think a bit on that after writing the comment. But there should be a clear incentive still to not go bankrupt and make their shares they hold worthless. With or without making depositors whole via ramping up the printer, your scenario still would make sense since even without the Fed backing, they could still just walk away couldn't they. The depositors…

> But there should be a clear incentive still to not go bankrupt and make their shares they hold worthless.

Absolutely. I just can't think of a good mechanism to implement it in the current framework. Maybe bonus payouts should be held in escrow/be otherwise claw-back-able for some time?

The only instance of clawing back dividends that I'm aware of is, ironically, Wirecard – I believe there is an ongoing lawsuit to claw back dividend payments from investors. (The irony is that the German government/regulator were actively prosecuting journalists and short sellers back when the line was trending up, yet now German courts are effectively holding long investors liable for Wirecard's fraud.)

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

#295

Post by nicholasjarnold »

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.

Reasons other than "it helps me build a credit history":

* you think you can make more money by investing your 30k and letting it grow and compound

* you are very prudent with your cash on hand and would rather have immediate access to liquid cash than save a little bit on interest which you pay down over the course of

Some of the dynamics here are a bit different when market returns are not looking great/steady and money isn't cheap anymore.

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

#296

Post by brodouevencode »

BitwiseFool wrote: post #213
JamesLeonis wrote: post #144

Earlier quoted context omitted.

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…

https://www.youtube.com/watch?v=ahMGoB01qiA

Peter Schiff did a man on the street with some folks of the Occupy movement, and basically proves your point - the desired goals were so scattered and sometimes even contradictory.

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

#297

Post by 4RealFreedom »

jillesvangurp wrote: post #58
frankfrankfrank wrote: post #12

Earlier quoted context omitted.

I would say the fact that banking is not something that is legally the authority of the federal government; even though states have seemingly acquiesced to their role and right eroding and being taken from them as the federal government persistently oversteps its bound and becomes ever more authoritarian. It’s something even most Americans don’t even understand anymore, let alone foreigners or immigrants; that the US…

When banks collapse, it definitely is a federal emergency. That's the whole problem. The 2008 crisis was basically a lot of banks needing to be bailed out and people demanding that something should be done (by the powers that be, i.e. the feds). The current banking crisis is relatively minor in comparison but a nice wake-up call that banks can and do collapse if you don't regulate them and that they can do a lot of d…

Just because people say something is an emergency, doesn't mean it's constitutional to do anything about it.

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

#298

Post by andirk »

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.

No. You need 2+ credit cards and ~2 bank accounts all that have existed for several years. "Carry a balance" of ~15% of your total credit limit BUT you need only _for the owed money to show up on the paper statement_. It's weird but if you pay off the thing you bought immediately that day, it's as if it never happened. It needs to be recorded on a statement, then pay 100% off before due date and don't owe anybody shit!

Curious how the parent commenter had great credit with no seasoned lines of credit. It's one of the biggest factors in the score.

Months before seeking a mortgage loan, learn the score's equation and appease it.

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

#299

Post by brodouevencode »

jliptzin wrote: post #53

It’s too late now, but the FDIC should just guarantee all deposits with no limit. If they did it with SVB they should do it for every other bank too moving forward. It is ridiculous to expect the average person to dig into bank balance sheets and try to determine whether their bank is managing risk properly. That would have prevented these runs, which counterintuitively means fewer FDIC payouts, not more. Then couple…

That would almost certainly ensure too-big-to-fail scenarios. I agree with the sentiment that bank failures and the resulting domino effect are terrible, but I don't think carte blanche unlimited depositor insurance is the answer.

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

#300

Post by akira2501 »

User23 wrote: post #285
akira2501 wrote: post #279

Earlier quoted context omitted.

> 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…

> 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.

Yes.. and if you increase the amount of money in circulation this impacts the amount of money being spent. You can imagine all sorts of ways that money can be minted without being circulated, but as soon as you do, this becomes a factor in this ratio, does it not?

> This is why hyperinflation is always kicked off not by money printing, but rather by a productivity collapse.

Has this occured in the US before? Are the examples you are using to draw this inference something that applies to the US?

> 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.

The labor market has changed _drastically_ in this time. You're really willing to assume such a simplistic explanation for these facts?

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