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

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

#411

Post by chrisco255 » Wed, May 03, 2023, 11:51 AM UTC

nirimda wrote: post #18

chrisco255 wrote: post #10

Earlier quoted context omitted.

this doesn't really explain it at all. The diversity in the banking system both pre-dated and post-dated those laws, and is present in states that don't have those laws and never did.

I think the first sentence can carry a lot more of the weight of explanation than you grant. There was a suspicion of big banks, which result in one particular law. But it also probably related in other rules and other behaviors.

When was the last time they were in effect and at what scale? A century ago? More than enough time for consolidation to happen. In practice, competition flourished due to the lack of restrictions on unique offerings, which allowed banks to compete for different market segments and industries (i.e. car loans vs mortgages). Another major factor is probably the existence of the 50 states themselves, which differ dramatically in real estate laws and consumer lending laws, allowing local banks to specialize and gain a niche but also expand to other states without restrictions.

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

#412

Post by EVa5I7bHFq9mnYK » Wed, May 03, 2023, 1:38 PM UTC

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…

When taking a mortgage you should prepare in advance. I took a couple of unneeded 2-year $500 loans, three unneeded credit cards and a car lease, all to jack up the credit score.

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

#413

Post by EVa5I7bHFq9mnYK » Wed, May 03, 2023, 1:54 PM UTC

I worked at a large bank. There were so many regulations, we were like permanently in trainings and yet the bank paid 9 figures in fines every quarter ... wonder how small banks can afford to navigate that at all.

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

#414

Post by flerchin » Wed, May 03, 2023, 2:00 PM UTC

jliptzin wrote: post #225

lxgr wrote: post #111

Earlier quoted context omitted.

> 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. We don't: The average person does not have $250k sitting in a checking or savings account at a single bank. SVB collapsed because they have highly correlated (due to being startups under effective, if not actual, corporate control of a few VCs), jumpy depositors. This is s…

Some do though. Having a lot of money in a checking account doesn’t mean someone is any more sophisticated with respect to finances. It could be retirement savings or an inheritance. No one should wake up one day and find out most of their life savings or inheritance is gone because of banking shenanigans. This is not like a hurricane or catastrophic expensive surgery. This is entirely preventable and fixable by the…

No Grandmas, not a single one, have taken a haircut, much less losing life savings.

Thus far, only bank investors have been impacted, and that seems likely to continue.

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

#415

Post by mbesto » Wed, May 03, 2023, 2:08 PM UTC

anigbrowl wrote: post #266

mbesto wrote: post #252

Earlier quoted context omitted.

The solution is simple, the implications are not: Eliminate the Fed. Banks eliminate inherent risk by being backstopped by the fed. A simple example of how this works is FDIC insurance. If a bank had all of its depositors holding $250k or less, it could essentially lend out all of that money with very little risk of getting sued by their depositors.

End the Fed people seem to think a catchy bumper sticker is an argument. Why was the Fed established in the first place? Because people were sick of bank runs and periodic financial panics. Do incumbents in such a system leverage their status, leading to new kinds of abuses? Arguably yes. That said, SVB was a member bank of the Federal Reserve and it didn't help their shareholders when the market decided that they we…

I don't disagree with anything you said. People want an answer to "I'm not sure what the best solution is here, but making the big banks even bigger is not it."

And that's what it basically boils down to. You don't want big banks? Eliminate the Fed.

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

#416

Post by BitwiseFool » Wed, May 03, 2023, 2:28 PM UTC

ryandrake wrote: post #361

BitwiseFool wrote: post #213

Earlier quoted context omitted.

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 remember this comic that ridiculed the "Occupy Wall Street doesn't have a goal" talking point, one of the many corporate-pushed talking points meant to discredit the movement: [1] 1: https://images2.dailykos.com/i/user/2722/TMW2011-10-12colorl...

I feel like the movement could have overcome the "corporate talking point" by actually having an organized and focused goal.

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

#417

Post by [deleted] » Wed, May 03, 2023, 2:29 PM UTC

diordiderot wrote: post #406

fowtowmowcow wrote: post #352

Earlier quoted context omitted.

Okay Joe and Sue don't pay back their loan. Either Beth now has to borrow for her house or business at a higher rate of interest OR we deflate the value of the currency (by increasing the money supply) to make up for the loss on the balance sheet. Congratulations your civilization just discovered run away inflation.

The house is still there, it is repriced and sold. The bank cannot lose money because money is a representation of all production and resources in the economy. (Edit: balance sheet is always zero) There is no deflation because you are the bank and you can print money. There isnt inflation because you can tax assets or reduce velocity of money (i.e. inflation) through transaction tax.

[deleted]

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

#418

Post by [deleted] » Wed, May 03, 2023, 2:32 PM UTC

pessimizer wrote: post #372

fowtowmowcow wrote: post #352

Earlier quoted context omitted.

Okay Joe and Sue don't pay back their loan. Either Beth now has to borrow for her house or business at a higher rate of interest OR we deflate the value of the currency (by increasing the money supply) to make up for the loss on the balance sheet. Congratulations your civilization just discovered run away inflation.

Joe and Sue also don't pay back their loans to private banks, and those banks get bailed out.

[deleted]

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

#419

Post by mercutio2 » Wed, May 03, 2023, 2:57 PM UTC

teekert wrote: post #392

hectormalot wrote: post #386

Earlier quoted context omitted.

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 thi…

No. Everyone does not pay interest on common purchases.

There is much more access to credit in the US, most Americans use that credit a moderate amount to smooth cash flow for bumpy purchasing.

It is certainly the case that there are outliers who overuse credit, and many people who abhor credit like it sounds like you do.

One of the biggest differences between US borrowing and the rest of the world is that bankruptcy is very very easy to access, has very little stigma, and clears out most debts.

This makes the perceived costs of carrying a large debt load quite different.

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

#420

Post by phendrenad2 » Wed, May 03, 2023, 3:04 PM UTC

I think banks are having their buggy-whip moment. There simply isn't a huge need for banks anymore, as most transactions are digital. They mostly serve as a vault of safe-deposit boxes where people keep their important documents and a place for businesses to trade their paper scrip for digital numbers. That trade-in function could be provided directly by the federal government for probably leas than a trillion dollars, and it's only going to get cheaper in the future as people continue to move away from paper currency.