5 ms·

I 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 r

by lmpdev 3y ago

I 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?

Mistletoe 3y ago
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-dealing-with-the-ripple-effects-of-two-prominent-failures-last-m https://www.npr.org/2023/04/30/1172957377/small-banks-are-de...
- lotsofpulp 3y ago
  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.
  - mensetmanusman 3y ago
    If they did pass this law, hyper loop would definitely be built so that banks across the states could still be the same building.
  - toast0 3y ago
    I live on an island with 25k people. And we've got 13 bank branches, and had one credit union branch (they close this branch, but their outdoor ATM remains). One branch is closing soon, because two banks merged and they don't need to keep both their branches.
- pbhjpbhj 3y ago
  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?
  - Finnucane 3y ago
    There used to be rules, at both the state and federal level, restricting interstate banking. Some of those rules were loosened in the 1980s, which allowed big banks to expand and started a wave of consolidation.
- chrisco255 3y ago
  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.
  - nirimda 3y ago
    I think the first sentence can carry a lot more of the weight of explanation than you grant. There was a suspicion of big banks, which result in one particular law. But it also probably related in other rules and other behaviors.
    - chrisco255 3y ago
      When was the last time they were in effect and at what scale? A century ago? More than enough time for consolidation to happen. In practice, competition flourished due to the lack of restrictions on unique offerings, which allowed banks to compete for different market segments and industries (i.e. car loans vs mortgages). Another major factor is probably the existence of the 50 states themselves, which differ dramatically in real estate laws and consumer lending laws, allowing local banks to specialize and gain a niche but also expand to other states without restrictions.
  - imtringued 3y ago
    It probably has to do with the fact that nowadays a bank needs 10 million euros of equity to get started in europe. also, the founders/CEO need to prove three years of academic and three years of practical experience, essentially shrinking down the people that are allowed to start new banks to existing bankers who most likely have no incentive to leave the large bank. This means the regulators are implicitly encouraging the formation of an oligopoly because they have enacted heavy regulation in response to large bank failures. It is kind of ironic.
quickthrower2 3y ago
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 https://www.ausbanking.org.au/insight/banking-by-numbers
- zamnos 3y ago
  What was the uBanks/person in the US before the GFC/2008?
- ThorsBane 3y ago
  Nice, I like lots of banks across the land.
frankfrankfrank 3y ago
I would say the fact that banking is not something that is legally the authority of the federal government; even though states have seemingly acquiesced to their role and right eroding and being taken from them as the federal government persistently oversteps its bound and becomes ever more authoritarian. It’s something even most Americans don’t even understand anymore, let alone foreigners or immigrants; that the USA is technically by design 50 countries, in an economic and organizational block for limited purposes. The core, supreme law of the land, the Constitution is explicit that anything not explicitly delegated to the Federal government is the right of the state and the people. The vast majority of what the federal government claims rights over is not mentioned at all, let alone explicitly delegates to the federal government. Included in that, banks and regulation of banks. Unfortunately, the founders of America were not positively explicit enough about the sovereignty of the states, probably because they had no understanding of the consolidating forces that would be introduced through things like automobiles, planes, roads, electricity, telecommunications, and computers and the internet. The small banks thrived and why America’s banking sector was so “fragmented”, was by design, in hopes of preventing the very consolidation of power and control that the founders were so concerned about and threatens everything now. American banks were community scale, community oriented, community based, and had community accountability; all factors that restrain psychopathic tendencies of banks and bankers. If these forces of evil that are trying to consolidate everything are not able to be stopped, by all measures things will only get worse for all of humanity from here. Just as banking has become stale and uniform and conformist without any real diversity, so will those pressures continue destroying real diversity in the world by trying to force everyone and everything into templated, repeatable objects for global uniformity. There has been no time in human history where consolidation of power was a good thing. Monolithic things fail spectacularly. I would argue that the degree of global consolidation of power lusted after by globalists even represents an existential threat to humanity, if not all life on this planet. It creates a single point of failure and also snuffs out what makes us human, actual, real diversity of people doing different things in different places and environments, under the guise of fraudulent diversity and diversification.
- jillesvangurp 3y ago
  When banks collapse, it definitely is a federal emergency. That's the whole problem. The 2008 crisis was basically a lot of banks needing to be bailed out and people demanding that something should be done (by the powers that be, i.e. the feds). The current banking crisis is relatively minor in comparison but a nice wake-up call that banks can and do collapse if you don't regulate them and that they can do a lot of damage when they do. What you are stating isn't that black and white. The US constitution is only worth as much as governments and judges are willing to enforce. And where it isn't very explicit, that's mostly a very political thing. In the case of banks means that a lot of power has actually been granted to federal authorities over time. All without changing a line of text in the constitution. There's been a bit of a cycle of de-regulation followed by crisis induced new regulations happening of course historically. And you might argue things are currently leaning towards more regulation rather than less given the apparent failure of the sector to self regulate and sort things out themselves.
Semaphor 3y ago
> but no where else AFAIK we are also an outlier, but Germany has quite a few banks: > As of December 2022, there were 1,389 credit institutions in [Germany] -- https://www.statista.com/statistics/350502/eurozone-germany-number-mfi-credit-institutions/ https://www.statista.com/statistics/350502/eurozone-germany-... edit: US (FDIC insured only) 1 bank per 78,680 people, Germany 1 bank per 60,670 people (afaik every bank is essentially FDIC insured here), rough numbers from 2020-2023 wikipedia and statista.
- allendoerfer 3y ago
  Germany is different, because of those 1,389 credit institutions, 359 are Sparkassen [0], which are county- and state-owned. Sparkassen are for profit, but are also supposed to provide basic financial services to small businesses in every county of Germany, which is why their number is so inflated. They are consolidating, closing branches and buying each other, but in a sense can already be counted as 1 bank. There are another 737 Volksbanken & Raiffeisenbanken [1], which I think you would call credit unions in the US, and are owned by their members. Both Sparkassen and Volksbanken have a complicated associated with bigger banks and service providers like asset managers (Landesbanken, DZ-Bank, LBS, Deutsche Leasing, Union Investment, etc.). It is just, that the number inflates, because of their upside-down ownership structure. The branches own the parents. [0]: https://www.dsgv.de/sparkassen-finanzgruppe/organisation/verbandsstruktur.html https://www.dsgv.de/sparkassen-finanzgruppe/organisation/ver... [1]: https://www.bvr.de/Presse/Zahlen_Daten_Fakten https://www.bvr.de/Presse/Zahlen_Daten_Fakten

by lmpdev 3y ago

Mistletoe 3y ago

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-dealing-with-the-ripple-effects-of-two-prominent-failures-last-m https://www.npr.org/2023/04/30/1172957377/small-banks-are-de...

lotsofpulp 3y ago
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.
- mensetmanusman 3y ago
  If they did pass this law, hyper loop would definitely be built so that banks across the states could still be the same building.
- toast0 3y ago
  I live on an island with 25k people. And we've got 13 bank branches, and had one credit union branch (they close this branch, but their outdoor ATM remains). One branch is closing soon, because two banks merged and they don't need to keep both their branches.
pbhjpbhj 3y ago
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?
- Finnucane 3y ago
  There used to be rules, at both the state and federal level, restricting interstate banking. Some of those rules were loosened in the 1980s, which allowed big banks to expand and started a wave of consolidation.
chrisco255 3y ago
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.
- nirimda 3y ago
  I think the first sentence can carry a lot more of the weight of explanation than you grant. There was a suspicion of big banks, which result in one particular law. But it also probably related in other rules and other behaviors.
  - chrisco255 3y ago
    When was the last time they were in effect and at what scale? A century ago? More than enough time for consolidation to happen. In practice, competition flourished due to the lack of restrictions on unique offerings, which allowed banks to compete for different market segments and industries (i.e. car loans vs mortgages). Another major factor is probably the existence of the 50 states themselves, which differ dramatically in real estate laws and consumer lending laws, allowing local banks to specialize and gain a niche but also expand to other states without restrictions.
- imtringued 3y ago
  It probably has to do with the fact that nowadays a bank needs 10 million euros of equity to get started in europe. also, the founders/CEO need to prove three years of academic and three years of practical experience, essentially shrinking down the people that are allowed to start new banks to existing bankers who most likely have no incentive to leave the large bank. This means the regulators are implicitly encouraging the formation of an oligopoly because they have enacted heavy regulation in response to large bank failures. It is kind of ironic.

quickthrower2 3y ago

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 https://www.ausbanking.org.au/insight/banking-by-numbers

zamnos 3y ago
What was the uBanks/person in the US before the GFC/2008?
ThorsBane 3y ago
Nice, I like lots of banks across the land.

frankfrankfrank 3y ago

I would say the fact that banking is not something that is legally the authority of the federal government; even though states have seemingly acquiesced to their role and right eroding and being taken from them as the federal government persistently oversteps its bound and becomes ever more authoritarian. It’s something even most Americans don’t even understand anymore, let alone foreigners or immigrants; that the USA is technically by design 50 countries, in an economic and organizational block for limited purposes. The core, supreme law of the land, the Constitution is explicit that anything not explicitly delegated to the Federal government is the right of the state and the people. The vast majority of what the federal government claims rights over is not mentioned at all, let alone explicitly delegates to the federal government. Included in that, banks and regulation of banks. Unfortunately, the founders of America were not positively explicit enough about the sovereignty of the states, probably because they had no understanding of the consolidating forces that would be introduced through things like automobiles, planes, roads, electricity, telecommunications, and computers and the internet. The small banks thrived and why America’s banking sector was so “fragmented”, was by design, in hopes of preventing the very consolidation of power and control that the founders were so concerned about and threatens everything now. American banks were community scale, community oriented, community based, and had community accountability; all factors that restrain psychopathic tendencies of banks and bankers. If these forces of evil that are trying to consolidate everything are not able to be stopped, by all measures things will only get worse for all of humanity from here. Just as banking has become stale and uniform and conformist without any real diversity, so will those pressures continue destroying real diversity in the world by trying to force everyone and everything into templated, repeatable objects for global uniformity. There has been no time in human history where consolidation of power was a good thing. Monolithic things fail spectacularly. I would argue that the degree of global consolidation of power lusted after by globalists even represents an existential threat to humanity, if not all life on this planet. It creates a single point of failure and also snuffs out what makes us human, actual, real diversity of people doing different things in different places and environments, under the guise of fraudulent diversity and diversification.

jillesvangurp 3y ago
When banks collapse, it definitely is a federal emergency. That's the whole problem. The 2008 crisis was basically a lot of banks needing to be bailed out and people demanding that something should be done (by the powers that be, i.e. the feds). The current banking crisis is relatively minor in comparison but a nice wake-up call that banks can and do collapse if you don't regulate them and that they can do a lot of damage when they do. What you are stating isn't that black and white. The US constitution is only worth as much as governments and judges are willing to enforce. And where it isn't very explicit, that's mostly a very political thing. In the case of banks means that a lot of power has actually been granted to federal authorities over time. All without changing a line of text in the constitution. There's been a bit of a cycle of de-regulation followed by crisis induced new regulations happening of course historically. And you might argue things are currently leaning towards more regulation rather than less given the apparent failure of the sector to self regulate and sort things out themselves.

Semaphor 3y ago

> but no where else AFAIK we are also an outlier, but Germany has quite a few banks: > As of December 2022, there were 1,389 credit institutions in [Germany] -- https://www.statista.com/statistics/350502/eurozone-germany-number-mfi-credit-institutions/ https://www.statista.com/statistics/350502/eurozone-germany-... edit: US (FDIC insured only) 1 bank per 78,680 people, Germany 1 bank per 60,670 people (afaik every bank is essentially FDIC insured here), rough numbers from 2020-2023 wikipedia and statista.

allendoerfer 3y ago
Germany is different, because of those 1,389 credit institutions, 359 are Sparkassen [0], which are county- and state-owned. Sparkassen are for profit, but are also supposed to provide basic financial services to small businesses in every county of Germany, which is why their number is so inflated. They are consolidating, closing branches and buying each other, but in a sense can already be counted as 1 bank. There are another 737 Volksbanken & Raiffeisenbanken [1], which I think you would call credit unions in the US, and are owned by their members. Both Sparkassen and Volksbanken have a complicated associated with bigger banks and service providers like asset managers (Landesbanken, DZ-Bank, LBS, Deutsche Leasing, Union Investment, etc.). It is just, that the number inflates, because of their upside-down ownership structure. The branches own the parents. [0]: https://www.dsgv.de/sparkassen-finanzgruppe/organisation/verbandsstruktur.html https://www.dsgv.de/sparkassen-finanzgruppe/organisation/ver... [1]: https://www.bvr.de/Presse/Zahlen_Daten_Fakten https://www.bvr.de/Presse/Zahlen_Daten_Fakten