My Understanding About 'Breaking Up The Big Banks'.......

[global1]

My feeble understanding is that there are many different conflicting business/services that are functioning under the umbrella of a 'big bank'. By conflicting my understanding is that one of these business/services can actually make money for another through a kind of collusion thereby compounding the $ take by the bank - yet on the surface these two businesses/services shouldn't exist under one umbrella.

When people hear of 'breaking up the big banks' the insinuation is that a lot of employees that work in the "big bank" would be out of jobs.

Again - my feeble understanding of this is that - these businesses/services now under the umbrella of one organization - would be spun off an become separate and distinct businesses/services - no longer under one umbrella - so as to eliminate the possibility of conflicting interests under one organization (i.e., the big bank) - to stop the churning of profits that actually harm the consumer.

It's not like these spun off businesses/services would cease to exist and that all the employees that work for these businesses/services would be let go. Actually - these spin offs would continue to exist - but they would be separate and distinct to eliminate the possibility of a money making collusion between them.

In essence - no employees would be out of jobs - in fact - more employees would probably need to be hired in these spin offs - where now - they benefit from having them under one umbrella and being responsible for multiple tasks associated with the combined businesses.

I'm bringing this up because the other day I was in a social situation where the people involved were under the impression that breaking up the big banks would cause massive unemployment.

Now either they are right and I'm under the wrong impression here or vice versa.

Can someone hear chime in about - what exactly does 'breaking up the big banks' mean and it's potential effect on our economy?

[Blue Meany]

1. For years we have been hearing about the "economy of size"...

that is, big businesses can do things more efficiently--with fewer employees--than smaller ones. If that is true, then breaking up the big banks would increase employment not decrease it.

But my experience watching businesses "efficiencies" brought into the academy is that they actually increase--rather dramatically--the number of high paid administrators while decreasing faculty and staff who engage in teaching and research, all the while claiming that they are saving money. If this is how it works in business, then breaking up the big banks would still be a good thing, because it would mean cutting out layers of managers who are making the catastrophic decisions that crashed our economy, while increasing lower level staff.

[jillan]

2. You know why that's a bullshit argument?

I work for Bank America for 25 years. Actually I started out at a Savings and Loan that went under in the 80s and B of a came in and gobbled up all the defunct S&Ls. First they were great. But around 2004 they changed their focus from excellent customer service to profits.
Once that happened it was a nightmare. They set our goals so high that they were unattainable and our raises were based on how well we met our goals. There went our raises.

Then there was attrition. Every time an employee quit or moved into a department their job was not replaced. This left a skeleton crew in the branches. There were many Friday afternoons when the line would literally be out the door and there will be only two tellers working. And those tellers were supposed to be selling everyone a new credit card.

The laying off of employees already happened. Salaries and benefits cut too much into their bottom line.

Smaller banks will provide better customer service than these monster banks and in doing so they will hire more staff.