America will soon see a wave of bank mergers?
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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?
#2All 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 will make "too big to fail" look quaint by comparison and the banks will end up owning everything.
Re: America will soon see a wave of bank mergers?
#3I know there are regulatory rules which partially explain the fragmented banking sector in the US compared to other nations: four example in Australia we only really have 4-5 proper banks
Are there other reasons that small banks have seemed to thrive in the United States but no where else?
Re: America will soon see a wave of bank mergers?
#4All 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…
Am I too tinfoil hat to think the big 4 planned it like this all along? I guess one could ask why WOULDN’T they have meetings trying to engineer exactly what is happening?
Re: America will soon see a wave of bank mergers?
#5I know there are regulatory rules which partially explain the fragmented banking sector in the US compared to other nations: four example in Australia we only really have 4-5 proper banks Are there other reasons that small banks have seemed to thrive in the United States but no where else?
SQUIRE: When America was in its earlier days, we had a - kind of a populist suspicion about big banks.
SMITH: So states looked for ways to support and protect local banks.
SQUIRE: A lot of states passed what were called branch banking laws, which made it illegal to operate a bank out of more than one building. It's hard to imagine it now. And so every little town in America had its own local bank.
https://www.npr.org/2023/04/30/1172957377/small-banks-are-de...
Re: America will soon see a wave of bank mergers?
#6All 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…
Financial speculation is zero sum, isn't it? So the fewer banks there are the more each one gets exposed to both sides? Your bank provides services for a person who monopolises some commodity, you have billions to loan out; but all your millions of other customers are hit by the price of that commodity and all deposit less, wiping out any increase in deposits.
Doesn't that mean unless they are specialised banks, that they necessarily must lose?
Maybe an economist can correct or confirm my instinct here?
Re: America will soon see a wave of bank mergers?
#7I know there are regulatory rules which partially explain the fragmented banking sector in the US compared to other nations: four example in Australia we only really have 4-5 proper banks Are there other reasons that small banks have seemed to thrive in the United States but no where else?
SQUIRE: When America was in its earlier days, we had a - kind of a populist suspicion about big banks. SMITH: So states looked for ways to support and protect local banks. SQUIRE: A lot of states passed what were called branch banking laws, which made it illegal to operate a bank out of more than one building. It's hard to imagine it now. And so every little town in America had its own local bank. https://www.npr.org…
I feel like they could bring back that law and it would not make a difference because there is not much reason to go inside a bank.
Re: America will soon see a wave of bank mergers?
#8I know there are regulatory rules which partially explain the fragmented banking sector in the US compared to other nations: four example in Australia we only really have 4-5 proper banks Are there other reasons that small banks have seemed to thrive in the United States but no where else?
SQUIRE: When America was in its earlier days, we had a - kind of a populist suspicion about big banks. SMITH: So states looked for ways to support and protect local banks. SQUIRE: A lot of states passed what were called branch banking laws, which made it illegal to operate a bank out of more than one building. It's hard to imagine it now. And so every little town in America had its own local bank. https://www.npr.org…
Is the idea that 'one building' means banks in other states won't open a branch in your state, and so you keep all the taxes?
Re: America will soon see a wave of bank mergers?
#9I know there are regulatory rules which partially explain the fragmented banking sector in the US compared to other nations: four example in Australia we only really have 4-5 proper banks Are there other reasons that small banks have seemed to thrive in the United States but no where else?
There are 95 banks in Australia. [1]
That is 3.6 microbanks per person
The US has 9 microbanks per person, but based on the prediction of 1000 banks would be similar to Australia.
[1] https://www.ausbanking.org.au/insight/banking-by-numbers
Re: America will soon see a wave of bank mergers?
#10I know there are regulatory rules which partially explain the fragmented banking sector in the US compared to other nations: four example in Australia we only really have 4-5 proper banks Are there other reasons that small banks have seemed to thrive in the United States but no where else?
SQUIRE: When America was in its earlier days, we had a - kind of a populist suspicion about big banks. SMITH: So states looked for ways to support and protect local banks. SQUIRE: A lot of states passed what were called branch banking laws, which made it illegal to operate a bank out of more than one building. It's hard to imagine it now. And so every little town in America had its own local bank. https://www.npr.org…
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.