Just 3 ‘superbanks’ now dominate industry

[Pale Blue Dot]

Source: MSNBC

The financial crisis that has been sweeping the globe has reshaped nearly every corner of the economy, but no industry has been altered more radically than banking.

Several of the nation's biggest banks have failed or been absorbed by healthier institutions, leaving three giant "superbanks" with an unprecedented concentration of market power: Bank of America, JPMorgan Chase and Wells Fargo.

While that may be good news for emerging giants and the failing companies they helped rescue, the new oligopoly raises troubling questions about regulation and competition, analysts and consumer advocates say.

"Bank fees are going up, up, up, and that’s the danger to consumers as more of these banks consolidate,” says Sally Greenberg, executive director of the National Consumer League. “It’s difficult for the average person to get a bank account that doesn’t involve fees, and if you get into financial distress you’re cooked, and you’ll be ‘fee-ed’ to death.”

According to a recently released banking fee study from Bankrate.com, ATM surcharges rose 11 percent this year to an average of $1.97, and the fee a bounced checks rose 2.5 percent to an

Read more: http://www.msnbc.msn.com/id/27441147/

---

This is another reason why things are not going to get better anytime soon.

[TechBear_Seattle]

1. Wasn't this the whole point of the economic crisis?

To weed out the weaker competition and allow for massive consolidation that even under Republican rules would normally have been illegal?

[wtmusic]

2. Hopefully high on the Obama administration's agenda:

Enforcing the Sherman Act and curbing rampant monopolization.

[Doremus]

17. Absolutely! n/t

[dixiegrrrrl]

3. You got it.

Whenever there is a "disaster" look for who benefits.

After all this time, and esp. the last 10 years, most people do not catch on to the game the banking industry is playing.
That is why some banks went under and some were "saved".

[Dover]

13. Yes. It is a strategy that they call "Consolidation" , which they deem more "efficient".

"Efficiency" is their excuse for everything as a matter of fact. And all those smaller banks
just clutter things up.

They have written many papers on it for the IMF and World Bank members, etc. which you can read online (some of which I've posted in DU's Economy forum). Of course there have been alternative
strategies presented, but 'consolidation' seems to be the model they are following.

I expect to see even more consolidation between now and Jan. 20 (and beyond). It is not yet clear where Obama stands on this, but his position on the bailout seems telling.

[Supersedeas]

24. the Shock Doctrine right here under our noses

[bitchkitty]

25. Nail. Head. n/t

[Chemical Bill]

4. I keep my money in a local credit union.

I know, I'm sure they have to deal with these big three all the time, but at least some of my money stays at home and out of the clutches of those who want to own me.

Bill

[bean fidhleir]

20. Likewise. Socialist banking - anything else is plain stupid (nt)

[Chemical Bill]

21. Socialist banking...

I really like that!

Bill

[Ian David]

5. Shock Doctrine at work! n/t

[catzies]

15. Yup. "Mission Accomplished" too, no less. Naomi Klein's been right on everything so far

n/t

[IthinkThereforeIAM]

6. "Bank fees are going up, up, up..."

... and that is why I have done all my banking(mortgage not included until recently) at your friendly local credit union since 1987. Do your duty, piss off your local banker and transfer your funds to a local credit union. You will find lower fees, better interest rates on loans and savings (share accounts) and find much friendlier service, the emphasis on SERVICE.

[Festivito]

7. Bank of America, JPMorgan Chase and Wells Fargo.

Lovely.

And as they consolidate, instead of bigger meaning better for US, our fees go higher, and our services decline.

Lovely.

[DogPoundPup]

8. FYI, what's really going down with the economy [audio]

Comment: When most of the people are living two or three paychecks from homelessness, working people are in effect serfs. They can have no control over work conditions or compensation. The conclusion is mine, the fact is from Michael Hudson. The most instructive hour I can imagine most people spending would be spent listening to this interview broadcast by KPFA with Michael Hudson, Kuchich's chief economic advisor, with the charming title "From Cold War To Class War". Herb Ruhs, MD

LISTEN: http://www.kpfa.org/archives/index.php?arch=29257

[DogPoundPup]

9. Why We Need to Limit Executive Compensation - Business Week 11-04-08

http://www.businessweek.com/managing/content/nov2008/ca2008114_493532_page_2.htm

[JohnyCanuck]

10. The Great Heist of 2008

Wall Street’s Great Heist of 2008

SNIP

It has already been widely reported that the banks are refusing to use their government windfalls to resume lending to other banks, businesses and consumers—the ostensible purpose of the cash injections—and are, instead, hoarding the money for the purpose of acquiring smaller and weaker banks. The so-called economic rescue plan is, in fact, a plan to effect a rapid consolidation of the US banking system, resulting in the domination of the economy by a few mega-banks, which will be free to set interest rates and lending standards as they see fit.

SNIP

While the bank executives were awarding themselves tens of millions in salaries and bonuses, their companies were being run into the ground. Since the start of 2007, for example, Merrill Lynch has had net losses of nearly $20 billion, or virtually all of the profits it made from 2003 to 2006. CEO John Thain took in $83 million in 2007. Now, thousands of Merrill employees are being laid off to cut $7 billion in costs as part of the takeover by Bank of America.

The events of the past two months have brought into sharper focus the naked power exercised by the American financial aristocracy over society and the state. All of the various schemes devised in response to the near-collapse of the financial system have had one thing in common: they proceed from the need to uphold the interests of the most powerful banks and the richest of the rich.

The combination of impotence, servility and duplicity of Congress and its Democratic leadership is being mercilessly exposed. Charles Schumer, the Democratic chairman of the Joint Economic Committee, said this week in regard to the banks’ refusal to use the government money to extend new loans, “There’s not much we can do other than jawbone.”

http://wsws.org/articles/2008/nov2008/pers-n01.shtml

[TygrBright]

11. I bank at a small, locally-owned bank. My deposits are Federally insured.

I'm feeling pretty good about that.

And fortunately, there are several good locally-owned banks and credit unions where I live. If my bank gets gobbled up, I can move my deposits.

smugly,
Bright

[bluesmail]

12. This American Life /Giant Pool of Money

Also explains in easy to understand language what happened. Google Giant Pool Of Money.

[Octafish]

14. Consolidation worked great for the News Biz.

Ben Bagdikian and Mark Hertsgaard warned us.

Not enough listened and all we got is ABCNNBCBSFauxNoiseNutwork.

Now we can all bank at MorganChase. Which is exactly what They wanted.

[GliderGuider]

16. Legalized bank heists are the least of our worries. This has "catastrophe" written all over it.

The degree of risk this poses to the US and world economy is beyond description. There is now no resilience whatsoever left in the banking system. If one of these supergiants goes down (say due to a major mark-to-market event in the derivatives market), the crash will impact very large sectors of the economy. The ripples will spread to the other supergiants, the debris will crush small banks that are in their footprint, and the rescue effort will destroy the entire world's world's underlying tax base. Such an event will be the trigger for the global "L-shaped" deflationary depression that will dominate the next two to five decades.

And it's going to happen. All the pieces of the puzzle are in place, and the system is now waiting for someone to strike the match.

[toopers]

18. The banking industry is always in a cycle . . .

of banks moving from local to state to regional to super regional to national to mega. I have a friend who has made quite a living starting local banks, growing them to "super local", and then selling to a regional or national bank that wants to come into the market.

[lelgt60]

19. Uh...isn't it really 5 super banks

What about Citi and Goldman Sachs?

In any event, why not can the charade and just form one big bank. Maybe give it's own country.

Seriously, they just have to be broken up into hundreds of regional banks.

The officers clearly need to be investigated.

[Poseidan]

22. too big to fail?

Not if you divide them.

[Zorra]

23. Nationalize them. We have to get them before they get us...again. n/t

[Trillo]

26. I've never understood why bank fees are legal

Either money is legal tender and can be used "as is", or it requires negotiation and correlating charges to use it.

Perhaps the banks themselves are involved in invalidating the government's currency.

Just wait until we move entirely to electronic currency, then some PHDs and their MBA colleagues will probably figure out how to apply heat dissipation equations to a constantly declining intrinsic value, if they haven't already. "Spend it now or lose a little everyday!" will be the rallying cry of the suits to the laborers!