Banking on Change (Part 1)

Why do people dislike banks?

Bankers got a black eye in 2008 when the nine largest US banks took government money to shore up their capital. The US banking system was facing a crisis of confidence that was causing an institutional run on its liabilities, threatening to turn the economy’s recession into a depression. While it was controversial, most people believe that the bailout helped avoid a much worse economic outcome.

But apart from this most recent escapade, people have been bothered by big banks for a long time. Stories about executive bonuses totaling tens of millions of dollars aggravate us. There’s something sleazy about making big money for yourself with other people’s money that goes back to Thomas Aquinas and natural law. That’s part of the reason most states have statutes that limit interest rates on loans.

We know that getting money from depositors that have it to borrowers who need it is an essential economic activity, but uber-wealthy bankers annoy us—more than rich tech entrepreneurs or sports stars. Former Fed Chair Paul Volker has said that the only real financial innovation for consumers in the past 20 years has been the automatic teller machine. And the level of financialization in our economy is troubling.

Source: Wikipedia

But the financial system is facing serious issues right now. Changes in regulation, in demographics, and in technology will create winners and losers among both big and small institutions over the next decade. Now more than ever, financial companies will have to adapt—or die.


Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
Leave a comment if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net
By | 2017-07-17T12:34:15+00:00 September 8th, 2014|banking, conspicuous consumption, financialization|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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