Saturday, January 22, 2011
This bit of big bank skullduggery should be broadcast from the rooftops.
George Washington has produced evidence that it’s the big banks that have failed to lend over the last year or so, while smaller banks have continued to lend.
Let’s be clear about that. The banks which are in receipt of billions of taxpayers’ money and various covert subsidies like the implicit “too big to fail” subsidy have, to put it impolitely, sat on their ar*ses, while the banks which are NOT in receipt of these totally unwarranted privileges have continued to lend.
Walter Bagehot will be turning in his grave. He said, “any aid to a present bad bank is the surest mode of preventing the establishment of a future good bank”. Quite right.
And there are plenty of small banks and small quasi banks out there ready to set up and/or do more business.
Siemens, the Germany company, was planning to set up a bank about six months ago.
Plus there was an article in the Sunday Times Money Section by James Charles (unfortunately not online as far as I can see) entitled “Become a bank and pick up 12% a year”. This was on the subject of small private lenders expanding their activities because of the caution of big banks.
And finally, Bank of America has just announced a $1.2 bn loss !!! They cannot even make a profit despite the billions of overt and covert subsidies they get.