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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

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 4y 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 4y 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 4y 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 4y 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 4y 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 4y 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 4y 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 4y 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 4y 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.

lotsofpulp 4y 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 4y 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 4y 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 4y 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 4y 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 4y 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 4y 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 4y 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 4y 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.