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From what I understand, it's so expensive and takes so long to form a bank in the US that it's generally better to acquire a bank than start one. The capital r
by iooi 8y ago
From what I understand, it's so expensive and takes so long to form a bank in the US that it's generally better to acquire a bank than start one. The capital requirements are the easy part.
- coryfklein 8y agoOn the other hand if you're able to get the money and time together to start a bank, it is literally the least likely business to fail. In fact, in growing areas it is not uncommon for local businesses to throw in together to do just this. Starting a restaurant? You've got a 21% chance of failure in the first year. You've started a bank? Congratulations, you can now lend money you don't even have and earn interest on it. You have joined the club of 7,053 FDIC insured institutions of which about 0.25% fail per year.
- rchaud 8y agoStarting a bank isn't just an issue of money and time, it's also about doing the hard work to obtain the necessary licenses, insurance and meet regulatory compliance requirements in every state you operate in. The 0.25% failure rate sounds like an under-estimate. I would guess that most banks are simply acquired by bigger ones before they're formally declared "insolvent".
- coryfklein 8y ago> doing the hard work to obtain the necessary licenses, insurance and meet regulatory compliance requirements in every state you operate in Which, I presume, is only done by paying lawyers to work for a decent length of time. Hence the money+time.