
Big Banks Had a Spectacular Quarter Despite All the Rules - artursapek
https://www.bloomberg.com/news/articles/2017-07-21/bank-profits-near-pre-crisis-peak-in-u-s-despite-all-the-rules
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bmcusick
_Despite_ all the rules? My friend, who do you think the rules are _for_?
Compliance departments are EXPENSIVE, which means that only big banks can
afford them. Which means less competition. Which means higher prices and
profits for the few that remain.

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JauntTrooper
Yes. Before the 2008-2009 financial crisis, ~100 new banks were founded every
year.

From 2010-2015 there were 4 new banks _total_.

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captain_crabs
All right, I'll bite. If me and my SO wanna buy a house, how should we go
about approaching the next financial crisis to get a good deal on one?

Who predicted the last one correctly, and what are those people saying now?

I'm under the assumption that the regulations put in place after the last
financial crisis are impotent, and that the people in the finance industry
have little incentive not to do it again. Is this an accurate statement?

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richardknop
Peter Schiff predicted the housing bubble. He also claims that the current
housing bubble is even bigger as the market imbalances have not been fixed
(government interference and bailouts intervened in the natural free market
process, if left to free market forces there would be a lot more failed
banks).

He's also a gold bug. Other than housing bubble he claims there is a massive
bubble in stock market and also that the next crisis will be a currency crisis
as people lose confidence in US dollar.

He would probably suggest to invest in gold and in markets outside of US/EU.

Disclaimer: I am not saying I agree with Peter Schiff just describing his
view, so please don't down vote me.

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frgtpsswrdlame
Peter Schiff is always predicting a crash, his call on the housing bubble is
more of a stopped clock type scenario.

~~~
adventured
> Peter Schiff is always predicting a crash, his call on the housing bubble is
> more of a stopped clock type scenario

You're absolutely correct that he sounds like an inevitable broken clock
outcome. However, his premise on why and how the last bubble was going to
explode, was extremely well supported by argumentation & data. He didn't just
say it, he argued it out and supported the premise, and he was right. It
wasn't luck, it made perfect sense, and he wasn't the only person using the
same argument details.

He's right this time that they've blown another huge bubble in asset values
via cheap money / hyper low interest rates. The Fed has finally gotten to the
point where they're openly admitting to that (Yellen just did so recently).
This is the third time in 20 years they've generated vast asset bubbles with
cheap money. Schiff is wrong on the timing because he has persistently
underestimated how long the Fed could keep the bubbles inflated via said cheap
money.

Raise interest rates just to the average level of the prior 50 years, and see
what happens to the housing market.

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sschueller
The rules put in place are a joke. Next bust is coming and everyone will
pretend again that they didn't see it coming. And again nothing will be fixed
and the tax payer will pay the bailout to the banks and their investors.

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matt_wulfeck
Have you bought a home in the last 5 years? It's not easy to get a loan. I had
to verify all of my financial documents pretty thoroughly. Not only that, but
my loan stipulated I still have enough cash to cover the mortgage for like six
months. Not many people have $20 grand laying around _after_ they buy a house.

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nissimk
Difficult to comply with (aka expensive) regulations create a barrier of entry
that helps these entrenched megabanks. Also, in finance, whenever regulations
impede business, after some time bankers learn how to circumvent the
regulations with new products or business process changes.

~~~
mcguffin777
The answer to this is new laws and rules

D.C. needs to refactor legacy

See Goodharts Law, Buffets institutional imperative, and numerous other
similar arguments in other contexts: we must keep evolving

Government is no different. But the banks and reps get in the way of this on
purpose

They have good reasons to do that. IMO the public has good reasons to reject
this and require them to evolve as well

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matt_wulfeck
Wasn't that literally a decade ago, not adjusted for inflation?

How do the financials compare with other, unregulated sectors over the same
period?

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oatsandsugar
Restrictions breed creativity, eh?

With the restrictions came huge increases in the stability and effectiveness
of significant bank operations (e.g. clearing of over the counter derivatives,
derivative reporting and all that).

This shouldn't be surprising.

But, it is interesting to see whether the restrictions have bred the stability
that they were designed too, or if banks are just shifting risks to new areas.

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atemerev
Those will get handy when the next crisis strikes (amplified by the vast
capital held by index funds and resulting selling spree, infrastructure credit
defaults, another round of real estate depreciation, etc.)

If "the market moves in the direction of maximum damage" maxim is correct, I'd
also add some runaway inflation to the mix.

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dollars2donuts
Raising interest rates certainly helped.

Also, this article is discussing revenue, not profit.

