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> And part of that increased regulation ought to be splitting investment banking risk from retail banking risk again. Both are risky enough as is. Combining the
by princeb 10y ago
> And part of that increased regulation ought to be splitting investment banking risk from retail banking risk again. Both are risky enough as is. Combining their (sometimes correlated!) risk is a really bad idea.
the implication of calling retail and investment banking risks "sometimes correlated" is that they are also sometimes uncorrelated.
The two common examples of diversified survivors of the last GFC are Citi and JPMC.
- erdevs 10y agoYes, they are not always correlated. Obviously. What point are you trying to make? > The two common examples of diversified survivors of the last GFC are Citi and JPMC. Are you actually holding Citi and JPMC up as examples of some kind in regard to benefits of combining retail and investment banking? If so, would you similarly argue that because not all S&L associations had gone bankrupt or been shuttered by the late 90s, that's somehow an indication that S&L associations needed no regulatory reform? If there are 10 people on an island and all of them eat a particular indigenous fruit and then 8 of them die from it-- but two survive unharmed!!-- would you say it is wise to continue eating the fruit?
- princeb 10y agoas long as they have any kind of non-correlation, they will benefit from merging. > would you say it is wise to continue eating the fruit i would say it is wise to do what the 2 survivors did... which is to have a diversified portfolio of retail and investment banking revenue streams.