sunil94062

Another Big Bank Failure: More Likely Than Not to Occur

Negative comments to this article notwithstanding, there is truth to what Reggie says, but maybe for somewhat different reasons.

Businesses succeed or fail largely because they serve an un-met need or meet them better than others. That is lassiez faire at work. The Best survive.

I see now that all the I-Banks are Bank Holding Companies, they are fish of the same stripe. Whereas, perhaps in the past they were somewhat differentiated and thus meeting an unmet need, and their existence was or could be justified. For example - Bear was too smallish a IB and good at nothing particularly, Lehman was mainly into Bonds and Fuxed income, till they went astray, Goldman was perhaps into Prop Desk trading (or what they really did well was to tell most folks to go long with their recommended positions while using their prop desk simultaneously to go short, knowing fully well that what their IB's touted was basically worthless anyhow and was foisted on the greedy and not the needy) and they did Private Wealth Management (favouring their buddies - aka Paulson hiring his protege to start TARP), Merrill claimed to be into retail brokerage with advise (as opposed to an e-Trade or a Schwab, which is just discounted "nothing" - you get what you pay for! (you pay peanuts you get monkies), but now, there is almost no differentiation between them. All Bank Holding Companies with one sponsor for money - Mr. Bernake or Mr. Paulson.

So we need maybe one mega institution and rest will have to re-invent themselves into something else or they shall ordinarily fail.

As an example, look at our Auto companies. All produce similar results at the same time. Basically all are broke. One survives?

Fundamentally, in an otherwise free economy, there can only be one least cost provider. And mostly only one gets there (to be least cost provider) faster than others and thus emerges as the eventual winner.

As I see it, we now have 5 or 6 mega US Banks (all with one large source of money - the FED's and all get charged the same for their borrowings at the Fed), and all we need is one Bank with a national or International footprint, or make it two. Not 10, as we have now! So pick your winner and toss the rest.

Who do you think is best of class right now with the chance to be the least cost provider? I doubt if it is GS or MS? They still buy fesh flowers for their offices and claim to make money still fleecing folks like AIG (the Fed's Ahem!), and get paid many milions each month nowadays to help advise the unwinding of AIG! Phew, what a scam! They put them there in the first place and now getting paid to unwind?? This is a franchise you wish to own?