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The Fortis deal creates very competition issues in the Netherlands, if ING or Rabo end up buying the ABN-Amro network that Fortis bought and now has to sell.

The incredible concentration of banks in recent days should give us pause:


Why The Biggest Banks Will Only Get Bigger

The three biggest banks in the country are now bigger than ever, with a combined 31% of all U.S. deposits. Bank of America leads the pack with 10.99% of all U.S. deposits. J.P. Morgan trails only slightly at 10.51%. And Citigroup ranks as the only one of the big three below the 10% cap, with 9.8% of all U.S. deposits.

Wells Fargo is a very distant fourth with just 4% of all U.S. deposits.

What we are looking at right now appears to be the beginning of an unprecedented concentration of banking power in the U.S. that was aided by the destruction of the federal cap on bank deposits. The cap prevented any bank from making acquisitions that would give it more than 10% of U.S. deposits.

A commenter to that article notes the same about the UK:


A similar position will exist in the UK. Once the dust settles we too will have three goliaths, Barclays, HSBC and Lloyds TSB. Most people in the UK will have their savings or mortgages with these three banks. Most businesses and entrepreneurs will have loans from these three banks. The power within our economy will be concentrated amongst three Boards of Directors who will have enormous responsibility. It may well mean a significant long term lack of competitiveness amongst these lenders which will lead in turn to worst deals for home owners and individuals. It will be a long time before financial entrepreneurs enter the market and take on these giants to give us back a real choice. The question we must all ask ourselves is how much choice can we really give ourselves, knowing what we now know. For the truth is we are all to blame for what has happened,. We took the fruit from the Garden of Eden and bit into it in the form of cheap loans, mortgages, and re-mortgages for that nice shiny car. We got greedy and bought property to rent out to others and will pay for the consequences for many years to come. In the UK we will have to put our trust in the FSA to be the guardians or our rights and to make sure we the people get a fair deal from these giants of capitalism. In time real choice will come back, and that will be a good thing; but when it does, we must all think back to 2008 and keep ourselves in check.

And these become REALLY 'too big to fail', and can blackmail governments, and the economy in general, even more easily than before.

This should not be tolerated. (In fact, I was preparing to post this comment as a FP post before I saw yours; it probably needs to be posted anyway, a bit later)

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Oct 1st, 2008 at 06:34:19 AM EST
A company "too big to fail" needs to either be nationalised or broken up.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Oct 1st, 2008 at 06:47:18 AM EST
[ Parent ]
but nobody seems to care about this new problem we're creating right now.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Oct 1st, 2008 at 07:01:42 AM EST
[ Parent ]
Well, at one level it's a problem we can look at next week/month, but it will need dealing with.
by Colman (colman at eurotrib.com) on Wed Oct 1st, 2008 at 07:05:45 AM EST
[ Parent ]
If we want to avoid pre-judging, the "nationalisation" and subsequent "breakup" can take place after it has failed and seen as too big.

Nationalisation of a bankrupt company wiping out shareholders and creditors should not be seen as a bad thing. It's definitely better than a straight bailout.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Wed Oct 1st, 2008 at 08:03:56 AM EST
[ Parent ]
A Commenter:
We took the fruit from the Garden of Eden and bit into it in the form of cheap loans, mortgages, and re-mortgages for that nice shiny car. We got greedy and bought property to rent out to others and will pay for the consequences for many years to come. In the UK we will have to put our trust in the FSA to be the guardians or our rights and to make sure we the people get a fair deal from these giants of capitalism. In time real choice will come back, and that will be a good thing; but when it does, we must all think back to 2008 and keep ourselves in check.

This has become common wisdom, but it's exaggerated at best and nonsense at worst. Cheap loans became poisonous because real income was either stagnant or falling. If real pay had followed productivity, the loans would have been unnecessary.

Instead the loan sharks have made a killing. Some ate so much they exploded, and the most adaptive are feeding off their remains.

The structural issue - practical wealth sharing - is barely being mentioned.

The nonsense will continue until governments start publishing metrics of street-level economic health which aren't as detached from everyday experience as GDP and stock prices are.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Oct 1st, 2008 at 07:30:05 AM EST
[ Parent ]

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