This page has been archived and commenting is disabled.

“Too Big To Fails” Have Stopped Being Banks

George Washington's picture




 

Image by William Banzai

Bloomberg reported last month:

Banks don’t have a need for deposits, and the demand for loans by households and firms is weak,” Niels Storm Stenbaek, chief economist at the Danish Bankers Association, said in a phone interview.

Wait … what?

Banks don’t need deposits?   They’re not giving many loans?  Isn’t that what banks do?

If they’re not collecting deposits and making loans, what are they doing?

In reality, big banks aren’t really acting like banks anymore.  Big banks do very little traditional banking, since most of their business is from financial speculation. For example, we noted in 2010 that less than 10% of Bank of America’s assets come from traditional banking deposits.

The big banks are manipulating every market.   They’re also taking over important aspects of the physical economy, including uranium mining, petroleum products, aluminum, ownership and operation of airports, toll roads, ports, and electricity.  And they are using these physical assets to massively manipulate commodities prices … scalping consumers of many billions of dollars each year (more here and more).

The evidence demonstrates that the big banks have essentially become huge criminal enterprises ...  waging warfare against the people of the world.

http://farm8.staticflickr.com/7124/7534252614_dc24534f4a_b.jpg
Image by William Banzai

Apart from the above-described manipulation, virtually all of the big banks’ profits come from taxpayer bailouts and subsidies  (see this, this and this).  Why don’t they need deposits? Because the taxpayers are showering them with money.

And they don’t need deposits because – as is now admitted by the mainstream – banks create money out of thin air.  In other words, banks don’t need deposits in order to make loans.

At the same time,  the big banks have sat on the money the government threw at them – with the encouragement of the Fed – instead of loaning it out to Main Street to kickstart the economy. As we noted in 2012, small banks are much more interested in making loans to the little guy than the TBTFs:

USA Today points out:

Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid, a USA TODAY/American University review found.

Dennis Santiago – CEO and Managing Director of Institutional Risk Analytics … notes:

The vast majority of this contraction of credit availability to American industry has been by the larger banks ….

Fortune reports that smaller banks are stepping in to fill the lending void left by the giant banks’ current hesitancy to make loans. Indeed, the article points out that the only reason that smaller banks haven’t been able to expand and thrive is that the too-big-to-fails have decreased competition ….

BusinessWeek notes:

As big banks struggle, community banks are stepping in to offer loans and lines of credit to small business owners….

Fed Governor Daniel K. Tarullo said:

The importance of traditional financial intermediation services, and hence of the smaller banks that typically specialize in providing those services, tends to increase during times of financial stress. Indeed, the crisis has highlighted the important continuing role of community banks….

[Federal Reserve Bank of Kansas President] Thomas M. Hoenig pointed out in a speech at a U.S. Chamber of Commerce summit in Washington:

During the recent financial crisis, losses quickly depleted the capital of these large, over-leveraged companies. As expected, these firms were rescued using government funds from the Troubled Asset Relief Program (TARP). The result was an immediate reduction in lending to Main Street, as the financial institutions tried to rebuild their capital. Although these institutions have raised substantial amounts of new capital, much of it has been used to repay the TARP funds instead of supporting new lending.

On the other hand, Hoenig pointed out:

In 2009, 45 percent of banks with assets under $1 billion increased their business lending.

45% is about 45% more than the amount of increased lending by the too big to fails.

 

Indeed, some very smart people say that the big banks aren’t really focusing as much on the lending business as smaller banks.

 

Specifically since Glass-Steagall was repealed in 1999, the giant banks have made much of their money in trading assets, securities, derivatives and other speculative bets, the banks’ own paper and securities, and in other money-making activities which have nothing to do with traditional depository functions.

Indeed, the Too Big To Fails are doing everything they can to fight the availability of low-cost loans for Main Street and the little guy.

The bottom line is that we don’t need the big banks.   Indeed, top economists, financial experts and bankers say that the big banks are too large … and their very size is threatening the economy. They say we need to break up the big banks to stabilize the economy.

This is especially true since the monsters are growing larger and larger … and have mutated so much that they’re no longer even behaving like real banks.

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 02/22/2015 - 07:24 | 5814583 hedgiex
hedgiex's picture

Agree. We rock you in your cradles of slavery. Game is over when they do not need to care about bank runs and do not have their licences to steal across all asset classes.

Get real in this New Normal and know their games.

Fri, 02/20/2015 - 12:20 | 5808119 KingTut
KingTut's picture

Commercial banks stopped making money on little main street customers in th 1980's.  That's when the big push to deregulate the banks began.  Sandy Weil, Robert Rubin, Greenspan, Summers, Bush, Cliton, Bush etc., coerced the gov to eliminate all the barriers between commercial banking and investment banking.  

Banks now make MUCH more money on the shadow/investment side than they ever will off our pathetic little deposits and mortgages.  They are now financial aircraft carriers of neo-colonialism, pilledging anything and everything the American Empire makes available. 

Fri, 02/20/2015 - 11:57 | 5808026 dot_bust
dot_bust's picture

Great article. I completely agree with the premise.

I believe that society can find a viable alternative to banks for things like ATMs and check clearing.

Banks are, as this article points out, criminal enterprises. They engage in money laundering for drug lords, war financing, and market manipulation on a huge scale. In short, they destroy entire countries...especially the U.S. 

Free the human species. Abolish the banks.

Fri, 02/20/2015 - 11:49 | 5807975 g'kar
g'kar's picture

Nice system. Banks don't want your money and pay you nothing if you insist they hold it. If you decide to hold cash and are caught with too much or spend too much cash, you are a criminal in government eyes.

Fri, 02/20/2015 - 11:36 | 5807918 irongator
irongator's picture

JP Morgan ruled the world 100 years ago. Come to think of it, he still does!

Fri, 02/20/2015 - 09:12 | 5807372 Quinvarius
Quinvarius's picture

100% fact.  We do not have a functioning banking system.  Whatever was left of it after the repeal of Glass-Steagall went away in 2008-09.

Fri, 02/20/2015 - 11:29 | 5807887 BuddyEffed
BuddyEffed's picture

Many business models appear to be morphing.  Was there something wrong with the old business models?

Fri, 02/20/2015 - 09:10 | 5807359 Comte d'herblay
Comte d'herblay's picture

" yada,,,,,,Because the taxpayers are showering them with money".

 

Would you kindly get this right???

Taxpayers have no say in the machinations of the Jewish Fed, the Jewish Treasury, and Jewish Commodities Exchange.

Each, The FED being the most egregious example, is run by a Jew, with the FED being run by three Jews for 40 years. Gensler at CFTC is another one. And Lew and Geithner B 4 him, are Jews. Dominic Strauss-Kahn at the IMF until recently.

And gee whiz, world, what to make of this?

https://www.facebook.com/ronpaul/posts/10150555596661686

So stop laying any blame at the feet of "taxpayers". 

Fri, 02/20/2015 - 11:57 | 5808024 demur
demur's picture

This is precisly why Hitler hated Jews. Jews goal is a two tier system to rule the world by impoveishing it. Along with controling the financials, note how nearly every jewish US politician is a socialist Demoncrat. 

Fri, 02/20/2015 - 09:15 | 5807382 Quinvarius
Quinvarius's picture

I don't think he meant the taxpayers themselves are doing it willingly. 

Fri, 02/20/2015 - 08:51 | 5807306 JBilyj
JBilyj's picture

Break these banks apart, and hang the CEOs for financial terrorism!

Fri, 02/20/2015 - 08:28 | 5807206 Niall Of The Ni...
Niall Of The Nine Hostages's picture

Well of course not! Banks that speculate in the paper of big, well-connected businesses aren't going to lend a thin dime to anyone who might one day be their customers' competitor.

They have much better ways of making money off the little guy. Coupond on government debt paid with crushing taxes imposed on households and small businesses, which the big banks' clients are, of course, exempt from paying.

Fri, 02/20/2015 - 07:50 | 5807104 overmedicatedun...
overmedicatedundersexed's picture

when 40 congressmen can't see the books of a public central bank, much less audit it's gold..to me that says these congressmen are not governing the country, obvious but sometimes one must point it out.

Fri, 02/20/2015 - 08:08 | 5807136 Ghordius
Ghordius's picture

those congressmen could put a motion of nationalization of the FED. Congress can just nationalize the FED in the same way as for example the UK Parliament did with with the Bank of England in 1946. I wonder, though, what people on the US main streets would say to that. let me guess... socialism?

Fri, 02/20/2015 - 10:28 | 5807658 marathonman
marathonman's picture

Ummm, it returns 90% of the 'profits' to the Treasury every year.  It is already de-facto nationalized.  And yes socialism has been here since at least the 1930's.

Fri, 02/20/2015 - 09:10 | 5807361 overmedicatedun...
overmedicatedundersexed's picture

ghordius, nationalization of the FED? is it not that now? it's just the puppets in congress must let the people think they run the nation when in fact it's others, no the bank is already called THE FEDERAL RESERVE. why can't you accept that fact it is a national bank ..it's owners are who owns everything

Fri, 02/20/2015 - 07:41 | 5807088 NoPension
NoPension's picture

Let me tell ya, the little banks are not even talking to you. They know something. Or regs have gotten so bad/ strict.
My theory, ultra low rates and people that look ok on paper, but really have one foot on a banana peel, the banks are scared to lend.
They know it's coming to a head.
Go to the party, but stay close to the door.

Fri, 02/20/2015 - 08:05 | 5807129 BlowsAgainstthe...
BlowsAgainsttheEmpire's picture

Charge-offs are near the bottom of the cycle.  And bank holdings of Treasuries and Agencies are high for this point in an expansion.  And going higher.

 

http://research.stlouisfed.org/fred2/graph/?g=11vD

 

I wonder what this says about the overall quality of loans and leases (debt) made since 2009. 

Fri, 02/20/2015 - 07:34 | 5807082 Ghordius
Ghordius's picture

the whole point of repealing Glass-Steagall was to allow the "Master Of The Universe" merchant/investment "banks" to absorb and take over enough of the retail banking system in order to make them "Too Big To Fail"

compare to the derivatives which this repeal allowed, further cementing the TBTF position, together with the FED Primary Dealer status

it is "capitalism", but it isn't "free market". it's oligopoly power, bought through unbridled lobbyism and an increasingly corrupt electoral system utterly dominated by untrackable electoral donations

meanwhile, undefaultable US Student Debt is rising at the tune of hundred billions per month. methinks this is the straw that might break the camel's back, if the USD continues to reign supreme

Fri, 02/20/2015 - 07:26 | 5807074 blown income
blown income's picture

Project Mayheim now!

Fri, 02/20/2015 - 07:24 | 5807068 bwh1214
bwh1214's picture

This blog is a great overview of the debt based monetary system ponzi. It starts off a bit slow with the goldsmith bankers but lays some good ground work that is used later in the first post. The bitcoin stuff gets a bit out there but still interesting. I hope the blogger continues to post http://debtcrash.blogspot.com/

 

I've posted this a few times and appologise for the redundancy but I was impressed with how the main post was laid out.  Perfect for someone who is new to these concepts.

Fri, 02/20/2015 - 07:47 | 5807099 GuusjA
GuusjA's picture

R5: "Niet nazi zeggen, dat vinden ze geen leuke humor, daar boven de wijwetenallesbeterenjulliehebbenmisschienlekkerderewijvenmaarwijhebbenmeergeld-grens".

 

http://www.volkskrant.nl/economie/alles-wat-u-gelezen-moet-hebben-over-g...

 

Tweede Kamerleden van CDA, ChristenUnie en VVD zijn bang voor het 'recht op vrijheid' van radicale moslimpredikers. De parlementariërs willen van KoeneBert (ministerie van WaarheidDelen) en Ivo Opstelten (Waarheidsvinding en verzoening) weten of zij de aangewezen personen zijn om te sPreken over het systeem 'Leven en Laten Leven'. 

 

http://www.telegraaf.nl/binnenland/23709550/__Kamervragen_over_jihadgala...

 

Assim al-Hakeem komt uit Saudi-Arabië en staat bekend om zijn mening dat psychosegelovigen moeten worden gedood als ze de profeet Mohammed beledigen. Dat zijn natuurlijk andere woorden dat 'doe eens normaal' van onze WildeGradjA tegen de @MinPres. Uiteraard is de profeet helemaal niet meer te beledigen, omdat hij niet meer leeft. Anderzijds is het alleen de '1' die iemand mag doden, doordat hij zijn 'vrijheid van bewustzijn' gebruikt om 'de waarheid te liegen'. Ook de Nederlandse moslim Abdul-Jabbar van der Ven mag zijn mening verkondigen dat hij niet zou rouwen als Geert Wilders zou overlijden. 

 

http://www.ftm.nl/column/cda-helpt-nederland-crisis/#comment-1322313140

 

Tien maanden geleden heeft een @CP_sME al geschreven dat de 'gecontroleerde' paradigmawisseling nog een tandje sneller kan door de invoering van het 'recht op waarheid'. Het uittesten van het GELD=ZUURSTOF-paradigma kan natuurlijk ook eerst in Griekenland beginnen. Daarbij gaan de hypotheekrente inkomsten niet meer in de kas van de 'bankenunie', maar gewoon naar de gemeente. Het Europees parlement krijgt dan als belangrijkste activiteit om het waarheiddelen tussen (rechts)personen te duiden in de context van de 'Logica van de 1'.

 

In de optiek van netwerk @GuusjA kunnen de kamerleden zich beter druk maken dat de brief van Varoufakis nog steeds niet de blauwdruk van het systeem 'Leven en Laten Leven' bevat. Het recalcitrante overkomende gedrag van de Grieken is nog niets waar de supporters van Feyenoord en =1S= op zinspelen. Nederland moest een flinke naheffing (gebaseerd op psychosegelovige cijfers) aan netwerk Juncker betalen, om TimmerendeFrans de taak te geven om de instituties van de EU en het IMF te besmetten met de inzichten van het GELD=ZUURSTOF-paradigma. Natuurlijk mocht dit van Draghi nog niet bekend worden gemaakt en daar moest Varoufakis 'een verhullend sausje over de tekst heen gieten'. 

Fri, 02/20/2015 - 07:43 | 5807090 Ghordius
Ghordius's picture

this "debt based monetary system ponzi" thing is a mixture of badly neo-keynesian and badly radical thinking

the current issues would be quite the same even if gold was the currency of the planet. in fact, they were, complete with merchant bankers sending warships to the harbours of the countries hooked up with debt

debt, i.e. credit, unbridled, undefaultable, without regard for moderation or anything resembling care for sustainability is the real problem, together with corruption

exchanging currencies from "softer" to "harder" just makes the whole thing... well, harder

imagine US Student Debt payable in gold, for a moment. get it?

Fri, 02/20/2015 - 09:29 | 5807442 Quinvarius
Quinvarius's picture

I think the issue is that gold doesn't lose value when there is a debt crisis, or over extension of credit, the way trust based fiat does.  Gold doesn't stop corrupt bankers from creating credit bubbles denominated in non existant gold to crash the system.  There has to be rule of law to stop corruption and crime.  But if you are smart enough not to get involved, and you keep track of your wealth in gold, you walk away intact with the same functional, valuable money.  It doesn't matter though.  Gold is money and it serves that same purpose with or without the government making use of it.

Fri, 02/20/2015 - 07:54 | 5807110 overmedicatedun...
overmedicatedundersexed's picture

Ghordius, (sell your greek business?-you been missing last several days).what is the Euro? well even you admit it is fiat. fake as pam anderson's tits. our current economic and political situation, is a direct consequence of fiat monies- with hard asset coins (per us constitution) as money..there is labor to create the coins, it can be inflated sure, but in the end there was value put into the coins..fiat is illusion and leads to corruption.

Fri, 02/20/2015 - 08:11 | 5807120 Ghordius
Ghordius's picture

every and each IOU that I write is an "illusion"... except that it isn't, it's a bond and and a promise and a contract

corruption has many faces. focusing on the hardness of the currency is imho quite... misleading

you can have gold and unbridled, rapacious global banking monsters at work at the same time. Rothschild et al demonstrated that it is possible

the article here is about TBTF, a consequence of the repeal of Glass-Steagall, a US banking regulation that was enacted during a time where a gold standard was in place. think about that

I repeat: Glass-Steagall was made law at a time when any USD was exchangeable with gold, officially and payable by the US Treasury

Fri, 02/20/2015 - 07:24 | 5807067 nmewn
nmewn's picture

But...but...but...FrankenDodd fixed it!

Its "the law" of the land!!! ;-)

Fri, 02/20/2015 - 08:59 | 5807327 lester1
lester1's picture

History will show QE from the Fed to be one of the biggest scams in human history. Far bigger than Bernie Madoff !

 

QE4 is coming. No doubt. QE is engineered to provide the Fed's "primary dealer" banks (that this article talks about) with free money. The Fed then secretly mandates their primary dealers to buy up stocks to keep this stock market going higher and higher no matter what.

 

QE is basically to protect the wealthy 1%'s assets from natural deflation which is due to the economic depression on main street.

 

I wish ZH would point this out !!

Do NOT follow this link or you will be banned from the site!