Bill Clinton is At the Bottom of the Big Bank Problem plus Kannafoot Comment

We get it that deregulation of the banks started with Reagan but it culminated with Bill Clinton when he failed to veto the killing of Glass-Steagall which was the specific protection against big banks, security trading, etc.  Bill Clinton had the opportunity to stand up for what's right and failed to do it.

Glass-Steagall went down in 1998 and you can see it was a financial shark tank with banks after that. In less than twenty years, there were only four left.  From 1999 to 2009, I was working at Citizens Bank which later was part of the Royal Bank of Scotland.  It was No. 4 at the time and it was in an almost constant state of acquisition (i.e. buying and absorbing other banks).  RBS has since collapsed due to rampaging incompetence in Edinburgh.


The above, specifically, is the danger of the Clintons insofar as we have seen Hillary Clinton whitewashing this problem one time after the other and she says, oh sure, I have something better for bank regulation.  Yah, so did Bill.

We have a tip for Hillary Clinton, however.  The best thing she can do for bank regulation is to get the hell out of this Presidential race.  Apparently she thinks she will do some big favor in fixing the damage Bill Clinton did but she offers not one scintilla of evidence as to why anyone should believe her when he will be right there advising her now.

Kannafoot said...

That chart doesn't even show all the smaller state banks that were swallowed up to start the feeding frenzy. For instance, in RI alone, Hospital Trust swallowed Columbus National Bank before Fleet swallowed Hospital Trust. Fleet also did a series of acquisitions in Connecticut - which was against RI law at the time - and that's what set the precedent in this area for interstate banking. 

Now, this chart perfectly illustrates what I said the other day about jobs. There are now 4 huge banks on that chart. There were 37 (on that chart) to start. Now, it's not a 9:1 relationship with jobs and back-office operations, but it's at least a 3 or 4:1 relationship. Remember, what makes an acquisition profitable is the consolidation of those back office operations and the elimination of almost the entire back office staff of the acquired institution. There's nothing about M&A activity that is good for a community in the long term. The job loss is an absolute killer.