America will soon see a wave of bank mergers? • Hacker News Board

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

#391

Post by lowkey » Wed, May 03, 2023, 2:40 AM UTC

Waterluvian wrote: post #50

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…

Canada has like 40 banks and strong regulation has kept them out of crises like in 2008. What’s the right number of banks per capita?

> Canada has like 40 banks and strong regulation has kept them out of crises like in 2008

Canada secretly bailed out their banks to the tune of $114 billion CAD in 2008. If you compare Canada's secret bank bailout to the US equivalent on a per capita basis it looks even worse. [0]

The reason we didn't hear about it at the time is that the big 5 Canadian Banks have so much power over the government and the media that they were better able to control the narrative.

Concentrating power in the hands of a few banks is a bad idea.

[0] https://www.cbc.ca/news/business/banks-got-114b-from-governm...

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

#392

Post by teekert » Wed, May 03, 2023, 2:49 AM UTC

hectormalot wrote: post #386

WaxProlix wrote: post #378

Earlier quoted context omitted.

What metrics do they use there to determine your loanworthiness?

Where I live there is a central register that identifies total exposure as well as red flags (late payments). Exposure is weighed differently. E.g. a 25k car loan might lower the acceptable mortgage by 25-100k because it’s backed by a depreciating asset and has higher interest rates. Similarly, a 5k credit card limit can have 2-5x the impact on a mortgage application. loan/credit application is mostly based on your i…

Sounds like my country, but, I don’t know anyone who has a credit card to increase their funds nor do I know anyone with a loan for a car.

It also sounds to me that the difference between how we live here and the American system (I feel most people have loans for stuff in the 1–10k €/$ range in the US?) is a couple of months of living a bit more frugal, and the result is a lifetime of profit because you avoid all this interest everywhere.

Here it is common (and recommended by the government and banks) to have a 5k buffer. It could be my bubble but most people I know maintain that buffer. It pays for a new washing machine or even a new (crappy) car if needed.

Is it my view of the US based on Netflix that everyone has loans for the smallest of thing (like TVs) or is it really true?

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

#393

Post by hakfoo » Wed, May 03, 2023, 3:33 AM UTC

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…

I don't understand why when a bank fails, the FDIC is so desperate to toss the carcass back to the private sector.

Nationalize it. We've already established that the shareholders are getting zilch, so there's no argument where we're "destroying value."

From a consumer/operations level, pulling the bank under the state umbrella instantly dissipates any need for a run. They're backed by the full financial might of the government, so you don't have to worry that the ATM will be taped over and you can't get your $35.19 out of the account.

From a contagion perspective, the state backstop and elimination of investor-centric motivations allows for stabilization and avoids fire sales. If the institution was asset-sound but not liquid, as people claimed for SVB, the state could afford to cut margins and pull funds from other sources while they waited for the maturity-mismatch problems to unwind as they mature.

From a social perspective, suddenly you have a new toy in your box of social engineering tricks. The branches that used to cater to crypto-bros can reopen offering basic checking for the unbanked, small-business loans, and mortgages in historically red-lined areas.

A conceptual equivalent might be the story of Conrail: in 1976, the Federal government took over a handful of basket-case Northeastern railroads; without investor meddling, they were able to take the long game-- rehabilitate and rationalize the system, eventually re-privatizing it in 1987. I'd argue banks are less difficult than railroads in that regard-- you're not as tied to physical place and literally rusting assets.

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

#394

Post by helsinki » Wed, May 03, 2023, 4:13 AM UTC

IAmGraydon wrote: post #289

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…

>Bailing out depositors isn't going to increase inflation - you're just giving people the same amount of money they already have.

That’s not how it works. The original funds do not evaporate out of thin air. They transferred to the opposite side of the trades that the banks are making, meaning customers’ funds are melting into the pockets of hedge funds, etc.

So, in effect, it is the opposite of what you’re stating. The money is not replaced; it is duplicated, thus causing inflation.

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

#395

Post by chickenpotpie » Wed, May 03, 2023, 4:13 AM UTC

supportengineer wrote: post #341

chickenpotpie wrote: post #316

Earlier quoted context omitted.

> you think you can make more money by investing your 30k and letting it grow and compound Mortgages especially. Mortgage interest is tax deductible and makes it easier for high tax bracket individuals to outperform their loan by investing.

> Mortgage interest is tax deductible Since 2017, not really, due to tax law changes. Cap of $10k but that includes state taxes paid also.

Absolutely not. That's property tax, not mortgage interest.

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

#396

Post by newswasboring » Wed, May 03, 2023, 4:19 AM UTC

digging wrote: post #98

newswasboring wrote: post #67

Earlier quoted context omitted.

No we are heading to a one party system. But that has nothing to do with first past the post. There are several historical and social reasons for that.

> But that has nothing to do with first past the post. You could be right, but how do we know the polarizing effect of FPTP isn't contributing to this change?

Everything is contributing to it. Our dietary preference contribute to this more than the FPTP system. My country is going through a dark period, and the way our elections are held has very little to do with it.

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

#397

Post by HWR_14 » Wed, May 03, 2023, 4:21 AM UTC

Spivak wrote: post #346

HWR_14 wrote: post #330

Earlier quoted context omitted.

You never proved you could handle more than $500 in debt. You then asked for maybe three-orders of magnitude more debt. Surely you can appreciate that difference.

There's no difference at all for someone who works a dayjob. The only thing that matters is that you have you demonstrated that you can make a fixed monthly payment reliably. Paying your bills, paying your rent, paying your CC all demonstrate that. If you rent a $1500/mo apartment you actually have managed $18k of debt. Doing the same thing but this time with interest proves nothing the others don't. Borrowing histor…

> . If you rent a $1500/mo apartment you actually have managed $18k of debt.

I agree. And slowly credit scores are starting to take rent into account.

> There's no difference at all for someone who works a dayjob.

But there is a difference. If you put your living expenses on a $500/mo credit card, you can have a $120k job and be eating ramen, living in a flophouse and spending the rest on drugfs or supporting people who cannot work. You cannot afford to service a mortgage. If you commonly service larger debts, then they don't have to worry about hidden things sapping all your funds.

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

#398

Post by fuzzfactor » Wed, May 03, 2023, 4:38 AM UTC

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

>flipping cars when bank execs didn't get jail time for the financial crisis

It wouldn't have done any good. Those that benefitted would have started flipping houses anyway.

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

#399

Post by HWR_14 » Wed, May 03, 2023, 4:44 AM UTC

nickjj wrote: post #354

HWR_14 wrote: post #307

Earlier quoted context omitted.

Rent and utilities rarely report to credit scores.

That's such a strange system if common routine things aren't counted towards your score. Is this a ploy to get you to buy things you don't need just to prove you can pay it back? Personally I've never owned a credit card, I always pay with a debit card or cash. 20 years ago I refused to participate in the credit scoring system and still stand by it.

I don't think it's a ploy. I think it's an accident of how the people who designed the credit score used credit. And then inertia keeping things from being updated.

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

#400

Post by throwaway68911 » Wed, May 03, 2023, 5:02 AM UTC

silisili wrote: post #381

throwaway68911 wrote: post #364

Earlier quoted context omitted.

How to improve your credit score ... get credit cards and pay most of them off, but never close them. Once you have established credit you will then be offer 0 APR credit cards for 12 to 48 months. With a zero APR credit card that has a balance say of 10,000 your monthly minimum payment is 1% of that so $100. $20,000 $200 a month ... once the APR promo ends transfer it to another card with zero APR. Closing credits h…

Not necessarily. My credit today is good, but not perfect. I have trouble getting any new credit card. All for the same stated reason - too much available unused credit. I'm sure my score would dive if I closed a bunch, just pointing out that having a bunch isn't always a good thing.

I subscribed to both the Experian and Transunion apps. Both I quickly open either app and lock or unlock my credit(Transunion allows you to lock/unlock Equifax too).

I can also see my credit scores as much as I want and ensure that I am using no more then 30% of my total accumulated credit limit. For example say I have 10 credit cards equally $100,000 combined then as long as don't have credit debt higher then $30,000 my credit remains good to very good to excellent. Your score will be negatively affected if your debt went to 31K and higher.

Another good thing is both apps alert me immediately when theres a change to my credit.

I pay about $50 a month for both, expensive yet well worth it especially if your looking to buy a house(s) and you overall really care about your financial health/score for present day or the future.