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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?

#101

Post by runnerup »

bradleyjg wrote: post #92
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

Banking is fundamentally broken. 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. Of course because we live in times where no one can tell the people that wha…

People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money there more than they put in banks which are offering >3% APR.

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

#103

Post by debacle »

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

> I'm not sure what the best solution is here

Stop letting banks write the regulations?

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

#104

Post by femiagbabiaka »

runnerup wrote: post #101
bradleyjg wrote: post #92

Earlier quoted context omitted.

Banking is fundamentally broken. 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. Of course because we live in times where no one can tell the people that wha…

People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money there more than they put in banks which are offering >3% APR.

Exactly right. People want reliability and stability from "household names" and they're go to banks that are offering fundamentally worse products[1] in order to get it.

1: At least in savings. The larger companies have insane credit card deals.

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

#105

Post by dehrmann »

> At the end of 2022 more than 400 banks with nearly $4trn in combined assets had unrealised losses on their securities portfolios worth at least half of their core equity capital.

Anything where a large amount of its assets aren't marked to market should be seen as a risk. For things like VC, this isn't such a big deal because it's the nature of the game. For banks, it leaves a lot of room for shenanigans,

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

#106

Post by Invictus0 »

runnerup wrote: post #101
bradleyjg wrote: post #92

Earlier quoted context omitted.

Banking is fundamentally broken. 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. Of course because we live in times where no one can tell the people that wha…

People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money there more than they put in banks which are offering >3% APR.

That's because high yield bank accounts are a phenomenon of the last 6 months and retail by and large hasn't got the message yet. 0.01 is not likely to last forever, and the TBTF banks are losing deposits.

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

#107

Post by siliconc0w »

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 far too much time, effort, and spraying our personal info to providers. Once you get an algorithmic denial or even cant access your money because their garbage site isn't working and you can't even get someone on the phone who can tell you why much less fix anything, you immediately see the need for breaking these banks up.

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

#108

Post by ant6n »

aqme28 wrote: post #35
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

Yeah it seems obviously risky. A small bank gets a little insolvent and so it gets absorbed by a larger bank. This system works fine when there’s a larger bank to absorb them, but it’s obviously untenable. What happens when the largest bank needs saving?

But if theres only one bank left and theres a bank run, where would people panic-transfer their money? It cannot go anywhere else!

…see, the one big bank cannot fail.

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

#110

Post by bradleyjg »

runnerup wrote: post #101
bradleyjg wrote: post #92

Earlier quoted context omitted.

Banking is fundamentally broken. 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. Of course because we live in times where no one can tell the people that wha…

People aren’t demanding deposit accounts that pay interest. The banks with the most deposits are providing 0.01% interest. People are still sticking their money there more than they put in banks which are offering >3% APR.

That’s still positive. If they want no risk, that number needs to be negative to cover the costs of holding and moving money around.
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