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Eén jaar na Lehman: sommige banken nog groter, en onfeilbaar...
In de New York Times staat een erg knappe "infographic". Met bewegende blokken wordt getoond hoe de Amerikaanse financiële sector implodeerde, en vervolgens opnieuw tot leven kwam.
Bron:New York Times en Bloomberg
Twee belangrijke vaststellingen :
1. Er wordt algemeen gepleit om banken af te slanken zodat ze niet meer "too big to fail" zijn, of dat ze het systeem niet meer kunnen bedreigen.JP Morganwas voor de crisis al in verschillende deelsegmenten van de markten een bijna monopolist geworden. Na de crisis en de overname van Washington Mutual en Bear Stearns is dat alleen maar erger geworden. Daarbij komt dat JP Morgan in onder meer derivaten zijn marktaandeel nog verstevigd heeft.JP Morganis vandaag de grootste bedreiging van het financiële systeem. Een opbreken van deze bank is een absolute noodzaak om ongevallen in de toekomst te vermijden.
2. De banken diegoede contactenhebben met de Federal Reserve, hebben beter stand gehouden, en zijn zelfs winnaars van de crisis geworden. Ik denk dan opnieuw aan JP Morgan maar natuurlijk ook aan de zakenbank Goldman Sachs.
Een jaar na de crisis is een aantal instellingen geïmplodeerd, andere hebben hun positie verstevigd op het puin van de sector.
8 Comments
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incognito
On 13 Sep, 2009
"Een opbreken van deze bank is een absolute noodzaak om ongevallen in de toekomst te vermijden."
Waren de banken in Japan dan zo groot? En was dat de oorzaak van de malaise daar? Dat de banken te groot waren? Of was het meer te wijten aan een banksysteem dat in zijn geheel te veel slechte leningen op zijn balans staan had?
De idee dat de problemen van de baan gaan zijn door de banken kleiner te maken is, me dunkt, puur wishfull thinking. Iets waar de meeste mensen natuurlijk in uitblinken. Ook intelligente mensen.
Het is het systeem zelf dat het probleem is. Maar aangezien daar geen eenvoudige oplossing voor bestaat, is het een onpopulaire en dus weinig gehoorde analyse. -
incognito
On 13 Sep, 2009
Wie het dus goed wil doen in de media, maakt ze beter niet.
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Nick Doms
On 13 Sep, 2009
I know i have said this before, but downsizing banks will never be a solution to avoid another crisis.
The solution lies in the structure of the financial markets and the products that are traded.
The same as if you wish to solve a problem in physics, you need the mathematical solution to do so.
If you wish to solve an economic problem, you need to resort to the underlying financial world to find it.
GS is not a "zakenbank" or an investment bank. They are a bank holding company with a commercial charter.
JPMChase is very well positioned from a depository perspective with a solid client base on both US coasts, so is Wells Fargo and BoA, although the latter has diversified its client base from a South-East concentration to a complete South Coast base.
Citi is at a concurrential risk because they were not able to follow suit and broaden their client base because of lack of capital.
The smaller banks are at serious risk now because of a low capital base, high exposure to CMBS, overhead and a reduced cashflow. -
Geert
On 13 Sep, 2009
@Koen2 and Nick Doms. I think we are mixing things.
1. Some banks are so big that they are actually becoming the market. Remember Fannie Mae, which had become the mortgage market, with known consequences.
JP Morgan is also a case in point. They have to become smaller, broken in to different activities, to recue "resonance risk"
2. The riskier banking activities have to be seperated from the savings activities. A reinstallation of the Glass-Steagal Act would therefore be timely .
All this has been written in several reports that were launched after the crisis. Unfortunately, these reports are now put in a waste basket, because people believe the problems are over. As explained over and over again, I believe problems will resurface the moment some measures are reversed.
This can take some years, but somewhere down the road people will be forced to implement these simple rules: break-up some banks and their activities, and seperate i.a. retail banking from merchant banking. -
Frank
On 13 Sep, 2009
@Geert
Excellent point. Some banks have become so big and broad in their activity that they add exponentially to the systemic risk of our financial system. They simply take hostage of governments. Glass Steagal should never have been dismantled. This is an accident waiting to happen. If or when we get another systemic shock we might or will come to the point that the holders of government debt will be shocked and will demand higher rates because they fear inflation or default risk caused by bailouts . At that moment the real crisis will surface. -
Theo
On 13 Sep, 2009
I believe Geert is right to explain the point.
On the other hand the discussion leads to several important questions, which I believe are missing:
1) yes, financial institutions make part of the Financial System - which in turn makes an integral part of the Economy
2) was the increased Globalisation since the fall of Communism as result of the consolidation in the Banks - or was the latter only a result of the former?
3) was the crisis in the Financial System as result of misalignment between Global Finance and Global Trade - or simply the result of a power struggle between those two systems
We need to decide what kind of economy we want in the future! Global banks are only the natural product of their global clients. Small local banks were a reflection of the days when we had small local economies.
I understand that there many pro-protectionism voices out there at a time of crisis, but we need to think this issue through as it has broader implications than it would appear at first sight.
Personally I think that we need to think in term of relative to the size of the economy as far as the scale and scope of financial institutions. -
Nick Doms
On 13 Sep, 2009
@ Geert and Frank
I agree that the abolishment of the Glass Steagal Act was a major mistake and a reinstatement to segregate investment banking would be a very good idea.
However, today we have at least two banks that primarely function as an investment bank but have a commercial charter, so that would mean that if we were to reinstate such law, we would also have to force them out of their current charter.
The Fed. and the SEC allowed both GS and MS the change of status so they would have access to the Fed window just like commercial banks.
How you turn this back at this point in time is almost like breaking them up into different institutions the way we did in 1934.
The difference now is that there is nothing to seperate from because neither one of them has any depository or retail activity to begin with.
By allowing both institutions to manipulate the applicable laws, we find ourselves in a conundrum and yet we encouraged them to do so.
By simply taking the first step towards such a big proposed change, we first need to change their charter back to investment banking and take away their access to the Fed window. After that, we can reinstate the Act and see what happens.
The other banks (BoA, WF, Citi) will have to divest into two seperate and individual components just as we did a long time ago with the JPM empire.
Your thoughts please. -
carl
On 14 Sep, 2009
In 2008 researchers at the IMF identified 124 international banking crises since 1970.Four were in the sevnties and 39 were in the 1980's and 74 in the 1990's and seven in this decade.The current worlwode banking crisis isn't included.Bernanke seems blind to how the banking system,lurching towards meltdown,had absorbed the instability that was missing from his macroeconomic data represented in his speech on february 2004 calles "The great Moderation".
The nominal value of derivative contracts held by US commercial banks (over which the Federal Reserve has regularly authoroty) lepat from 33 trillion dollar at the end of 1998 to 101 trillion dollar at the end of 2005,about the time Alan Greenspan left office.This is roughly a 17 percent annual increase.But ... wait... By June 30,2007 the nominal value had risen another 50 percent - to 153 trillion dollar.
The problems of the supersonic derivitaves were more than evident.
Collaterialized -debt- obligations were collapsing.
Another example : Home mortgage debt rose by 380 billion dollar in 2000 .In 2005 it increased by 1,1 trillion dollar.
43 percent of the rise in the private payrolls between 2001 and early 2005 were housing related jobs.
By July 2005 42 percent of first-time home byuers were putting no money down.
In every category,bank lending was diving off the precipice.
Bernanke's banks were closing leveraged syndicated deals at an accelerating pace : from 220 billion dollar in 2005 to 360 billion dollar in 2006 to 570 billion dollar in the first half of 2007.
Result now?
Banks wrote off 3,8 billion dollar of leveraged loans in 2007 and another 54,4 billion dollar in 2008.
The balance sheet of the Federal reserve ballooned from around 800 billion dollar in december 2007 to two trillion dollar in september 2009. or 2,5 time.
Bernanke's idea is that big banks are too big to fail.
Thus the bigger the banks the more power they have and the moral hazard principle is helping them and the taxpayer will come to rescue them.That's how Bernake is doing.
His Great Depression was a flop,but he may not reconize his failure.
Maybe 100 percent inflation will solve the mortgage problem.
Chicago's Curus Bank was this weekend taken over by regulators.The yaer's tally of bank failures in the US is now 91.
John M.Keynes wrote " The markets can remain irrational longer than you can remain solvent".
A broader construction might be : "Collective illusions can remain in place for longer than most rational observers expect " Just one example of this among others : The belief that individuals can prosper by assuming increasing levels of debt or that nation states can do so.
Wie zei er ook weer : Eeen uitzondering op de wet van de zwaartekracht is wel dat een volle geldbeurs verlichting kan brengen,terwijl een lege beurs erg zwaar kan drukken.
