Which banks live or die? Wielding $250 billion, U.S. may decide

[Dover]

Listened to Paulson on Charlie Rose tonight. He was quick to say that 'consolidation' was inevitable but NOT the main driver for their government 'fixes'. I find that hard to believe
as these guys are in the catbird seat to sort out which banks will be merged and which will
be eliminated. Bank consolidation has been going on for at least 20 years with one change
after the other enticing banks to riskier and riskier behavior. I think we are experiencing a true crisis due to lack of oversight from government, the central banks and the financial companies themselves in risky asset trading, quick mergers that weren't well integrated at management level, etc. ETC...however there is also an intentional movement toward consolidation which is perhaps
opportunistically using this 'correction' period to further its agenda with an eye toward a more
globalized presence in another decade or so.

And besides this continuing consolidation trend posing a great threat to small business lending (which are usually done by the smaller banks which are being threatened with extinction), there is now clear evidence that these MEGAbanks CAN fail which not only effects them but an enormous swath of national and global economies. And then there is the issue of having these MEGAbanks become too big and complex to regulate at any level. Their size also makes any government susceptible to being essentially bought out while citizens are forced into a monopolistic system whose tentacles now reach to global proportions.

And yet, they continue in this trend.
WHO WILL STOP THEM...especially when THEY are the ones writing policy?

If you missed Charlie Rose, this article spells out their plan for further consolidation and probably the elimination of many community banks.


Which banks live or die? Wielding $250 billion, U.S. may decide.

October 15, 2008

By flooding the U.S. banking system with hundreds of billions of dollars in cheap capital, the government could find itself funding the most dramatic change in the nation's financial landscape since the deregulation drive of the 1980s.

That's because the Treasury secretary and bank regulators will decide which banks get an infusion of government money, and which will be denied. Many of the nation's 8,400 banks -- especially the smaller and weaker among them -- may be allowed to fail or be swallowed by bigger rivals, industry analysts say.

"It will hasten consolidation, no doubt about it," said Frederick Cannon, chief equity strategist at investment bank Keefe, Bruyette & Woods Inc.

The stock market reflected that fact Tuesday, he said, noting that investors bid up the shares of banks more likely to be helped by the government, while shares of capital-starved institutions considered unlikely to get government funds declined.

The program is also likely to hasten the evolution of the country's financial system from a conglomeration of community banks into a network of bigger, interconnected institutions, said Timothy J. Yeager, a former economist for the Federal Reserve Bank of St. Louis and a finance professor at the University of Arkansas....cont'd

http://www.latimes.com/business/la-fi-banks15-2008oct15,0,953244,print.story




Also this from the article:

Some bankers said that other elements of the Treasury's rescue plan, including an expansion of FDIC insurance to beyond $250,000 for non-interest-bearing accounts (those used mostly by business customers) might play a more important role in shoring up confidence in medium-sized and small banks.

I didn't realize the new $250,000 limit was only for NON-interest-bearing accounts. Seems that would leave out a number of savings accounts.


I wonder if there is a list of which banks are most likely to be bailed out?
I predict that shortly after the election (and before the end of the year) we'll experience
a much more serious collapsing of the economy at which time the money provided to the banks through
the bailouts and other money will be used by the banks to acquire the ones that collapse at that time, while others will not receive any help and will, of course, die. In other words, a more intense house cleaning.

[Dover]

1. Thought I'd 'consolidate' these bank consolidation articles at the top..n/t