The obvious answer to the above headline, if you’re a savings investor, is: big banks are good for giving savings investors extremely low interest rates on savings accounts, CDs, and money market accounts.
But there’s a larger, less flippant question here about the large banks, those being Wells Fargo, Bank of America, Chase, and Citigroup. This bigger question is whether banks have some business need to be as big as they are, or whether our financial system would benefit from more competition.
Surely it’s hard to argue that four banks holding 40 percent of total deposits is good for bank rates. Would you pay high interest rates on savings accounts, CDs, and money market accounts if your customers were coming to you in droves while you’re paying them low interest rates?
Nevertheless, Bank of America CEO Bryan Moynihan and JP Morgan Chase CEO Jamie Dimon have both been making the public case that big banks are good for business and America. Their logic:
– Big banks can make big loans
– Big banks keep America competitive globally, helping businesses expand into foreign markets (Citigroup has been really playing up this angle)
– Big banks can “innovate” new financial products (Bank of America’s mortgage department, formerly known as Countrywide, has begun to wade back into doing non-standard mortgages)
What do you think? Granted they’re no good for high deposit rates, but overall, do the big banks have a reason to exist?
Similar Posts:
- Citigroup to Be Revalued On Friday
- Will Big Banks Really Be Broken Up Into Bits and Pieces?
- Would You Buy a Jumbo CD from a Mexican Bank?
- Continuing “Credit Crunch” Could Spell Higher Bank Rates Sometime Soon
- Should Savers Root for Chase Bank to be Broken Into Itty Bitty Pieces?
