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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?

#261

Post by __MatrixMan__ »

jjtheblunt wrote: post #137
rr808 wrote: post #126

I'm not convinced that USA needs the thousands of banks it does. Most countries survive with a small set of national banks. There seems to be little downside, and makes sense not to have all the duplicated overhead.

it's sort of a US thing to let alternatives proliferate so they compete with one another, or are supposed to do so, rather than collude and whatever else goes on.

I find it's difficult to keep track of. At one point I had money of one retirement color or another (traditional, Roth, HSA) being held by six different institutions in nine different accounts. Navigating the maze of who needs to send checks to whom has been a tremendous pain and I'm worried that I overlooked something in the consolidation effort.

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

#262

Post by tastyfreeze »

vharuck wrote: post #249
tastyfreeze wrote: post #196

Earlier quoted context omitted.

Sorry, you must not be paying attention or this is sarcasm. Giving the government the keys to your banking data and expecting them to respect rights is naive. Government ownership of data means they don't have to respect privacy because they already own the data. The US government is wholesale spying on the entirety of electronic communications and working with social media sites to make some voices less prominent. P…

>The US government is wholesale spying on the entirety of electronic communications and working with social media sites to make some voices less prominent. Private business should be able to tell the government to pound sand when banking data is requested without a warrant or subpoena. Do they actually tell the government to pound sand, though? In the end, if I can only rely on the moral codes of for-profit companies…

You're dancing around a point.

> for-profit companies who are weighing the value of a good relationship with me versus one with the US government

For-profit companies shouldn't need or care about a relationship with the US government beyond selling the same product they do to everybody else. That is my ideal. How to get there is the contention. You would like to give the for-profit company to the US government and thus removing the relationship. I would like to see the power the US government has over for-profit businesses reduced and preferably eliminated. Giving banks to the US government results in less private sector and a larger government. A larger government makes more people dependent on the success and benevolence of the government. History has proven unequivocally that governments cannot be trusted to remain neither benevolent nor successful. Concentrating power makes the temptation for government malevolence too great. Power will be abused by someone eventually. That is human nature. Concentrating power is just creating a ticking bomb. The way for more people to succeed is to reduce dependence on government and distribute power among businesses that serve only their customers. Business that are reliant on the trust of their customers will think twice about betraying that trust. If their customers ever learn of their betrayal it means the death of their business in competitive markets.

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

#263

Post by lcnPylGDnU4H9OF »

lockhouse wrote: post #250
lcnPylGDnU4H9OF wrote: post #237

Earlier quoted context omitted.

At least it would give a private citizen recourse if snooping did happen; it would become private by law. It is currently not. Maybe it all goes south and people are worse off with their privacy than now but I can't even imagine what "worse off" would be. The particular example you gave ("spooks in three letter agencies") currently happens and I can't exactly expect it to stop. How could it be worse?

I’m curious, what recourse do you or anyone else have against the CIA, FBI, or any other Department of Justice or Intelligence agency that you wouldn’t also have with a commercial bank?

The commercial bank has something called a "privacy policy" in which they explain that they will choose not to respect my privacy. A government entity isn't allowed to do that. There are actually stricter laws for government invasions of privacy than corporate.

To your concern that these three-letter spooks will spy on you: what would they do that they're not already doing? That isn't to excuse the spying; I'm just pointing out that these are separate issues. Tackle the fact that the NSA compiles all unencrypted HTTP traffic separately from the fact that JP Morgan Chase knows my financial history and doesn't have to care about keeping it private per my idea of private.

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

#264

Post by anigbrowl »

kiawe_fire wrote: post #154
JohnFen wrote: post #142

Earlier quoted context omitted.

> The government and those who work for them are not your friends. Neither are corporations. Both will abuse you. The difference between the two is that you have at least a chance of altering how government works, but you have no chance with a corporation.

They both have highly imperfect avenues with which we can exert influence, but one has more power to compel you to support them legally “or else”.

That same one also has far more mechanisms and legal avenues for accountability, vs the other that tries to shuffle people off into arbitration and the like, while at the same time spending money to lobby against legislation that might impact its business model.

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

#265

Post by tiedieconderoga »

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.

Nah, you can easily get a residential mortgage from smaller lenders with just proof of income/savings, and the sort of light credit usage you get from monthly CC payments, rent, utilities. That will net you a solid credit score, too.

The issue is with very large banks. They have rigid underwriting deparments and poor CS, so if you approach them as a first-time buyer who isn't already leveraged to the hilt, they will make it a long and painful process. Mortgage agents are a prime target for AI replacements, because all they do is relay information between you and the underwriting departments that make the real decisions.

Other people have pointed out that when you take a loan for something you can afford, you can use the money you would have spent on other things in the meantime. (As long as you're confident that you'll keep making enough money to make your payments for the life of the loan.)

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

#266

Post by anigbrowl »

mbesto wrote: post #252
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

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 were over-exposed.

Looking at your assertion from the opposite direction, if you don't trust the Federal Reserve, why would you trust a smaller bank to do a better job? Sure, it's in their long-term interest to self-regulate and operate prudently, but history is full of people acting irrationally because of greed, myopia, confirmation bias etc. The fed at least exhibits moderate transparency of structure and operation - risk is distributed across a set of reserve banks, and the membership and balance sheets of the regional reserve banks are open to scrutiny.

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

#267

Post by Scoundreller »

samtho wrote: post #194
bootwoot wrote: post #165

Earlier quoted context omitted.

That's exactly what Silicon Valley Bank did. While federal bonds are nearly risk free in terms of default, they still suffer from interest rate risk -- that is, they may lose significant value if interest rates rise. In the case of SVB, US treasury bonds lost enough value to make the bank insolvent.

Money market accounts use the same vehicle (treasuries) and still manage to be ostensibly safer than smaller banks at the moment. These funds manage their investments by continuously buying new bonds and selling off old thus limiting the risk exposure to all but the most sudden interest hikes.

I think money market accounts don’t sell off old, but rather they hold short dated stuff to maturity. And constantly reset the rate they pay holders.

Of course, they can have counterparty risks. The counterparty is usually unprepared to actually pay up and expects to rollover its debt.

Sometimes that melts down and doesn’t happen:

https://globalnews.ca/news/160176/coventree-executives-faile...

(Scroll down to Canada in 08-09 here):

https://en.m.wikipedia.org/wiki/Asset-backed_commercial_pape...

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

#268

Post by ericpauley »

drivebyhooting wrote: post #131
JohnFen wrote: post #118

Earlier quoted context omitted.

I think that the usual rationale for taking a loan out to pay for something you can afford without a loan is that you can take the money you have and invest it in something that pays more than what the interest on the loan is. It's a kind of arbitrage. If you're losing money overall, you're doing it wrong.

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.

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

#269

Post by drumhead »

Banks are a terrible investment. To get above average rate of growth they have to do something risky like lending too much to people they shouldnt be lending to or playing timing games with assets and liabilites. With the bonuses to their staff exceeding returns to shareholders its seems that banks are configured for their senior staffs benefit rather than their owners.

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

#270

Post by lumb63 »

samtho wrote: post #194
bootwoot wrote: post #165

Earlier quoted context omitted.

That's exactly what Silicon Valley Bank did. While federal bonds are nearly risk free in terms of default, they still suffer from interest rate risk -- that is, they may lose significant value if interest rates rise. In the case of SVB, US treasury bonds lost enough value to make the bank insolvent.

Money market accounts use the same vehicle (treasuries) and still manage to be ostensibly safer than smaller banks at the moment. These funds manage their investments by continuously buying new bonds and selling off old thus limiting the risk exposure to all but the most sudden interest hikes.

They also, AFAIK, don’t make loans like mortgages, auto loans, credit card lines, etc. All those loans are subject to the same interest rate risk. They’re not nearly as liquid, either.
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