Tuesday, September 30, 2008

Banking thoughts...

I read an interesting article in the wall street journal comparing the current consolidation in the banking sector with much more gradual consolidation of Japan's banking sector after the collapse of it's real estate market in the 1990s.

The article seems dead on. The Federal Reserve is accelerating a banking consolidation that took much longer in japan.

It's interesting to note that Japan's consolidation cost $440B, while ours starts at $700B. I guess bigger economy, bigger costs.

I had always wondered how quickly our banking system would consolidate. For many years state and possibly Federal laws had made interstate banking difficult. With the gradual removal of those barriers banks like BofA began growing (and growing). however, the article notes that there are still thousands of small local banks and many mid-sized. The local presence is certainly a good thing.

I wonder though, do we need large nationwide banks to reduce the cost of interstate commerce and allow us to compete internationally?

Regards, makingourway

1 comment:

Anonymous said...

This was a great post! There is so much turbulence in the market today, and people need peace of mind more than ever. I wanted to offer your readers a link to another blogger who is doing great work. He writes about our 'childhood money messages' and how the best approach to stability in today's market is to resist letting these emotions control our buying/selling habits. It is really fascinating work, and something you should all check out. His name is Spencer Sherman, and you can view his blog at http://www.curemoneymadness.com/blog.