Strong opinions, weakly held

Banks really are evil

Here’s a selection of stories involving banks that appeared just this weekend in the New York Times:

Major Banks Aid in Payday Loans Banned by States

For the banks, it can be a lucrative partnership. At first blush, processing automatic withdrawals hardly seems like a source of profit. But many customers are already on shaky financial footing. The withdrawals often set off a cascade of fees from problems like overdrafts. Roughly 27 percent of payday loan borrowers say that the loans caused them to overdraw their accounts, according to a report released this month by the Pew Charitable Trusts. That fee income is coveted, given that financial regulations limiting fees on debit and credit cards have cost banks billions of dollars.

Ahead of Election in Cyprus, Gloom and Voter Apathy Tied to Financial Woes

What many Cypriots find most frustrating is that their crisis, like those in Ireland and Iceland before them, was concentrated in the banks. There is no sovereign debt crisis and, before the banking collapse, their economy was relatively healthy. Why, they wonder, should they suffer for the misdeeds of a few bankers? Why cover losses that should be borne, at least in part, by private investors?

Patron of Siena Stumbles

There is little question, though, that JPMorgan helped enable an acquisition that was regarded as foolish by many people and that severely weakened Monte dei Paschi. Later, Deutsche Bank of Germany and Nomura of Japan undertook transactions with previous management at Monte dei Paschi that helped it conceal losses of 730 million euros, raising further questions about the conduct of investment banks.

It’s like this pretty much every week.


  1. “Never attribute to malice that which is adequately explained by stupidity.”

    Are banks a great counterfactual to Hanlon’s razor, or the greatest counterfactual to Hanlon’s razor?

  2. man, a long article in the Jan/Feb Atlantic really took apart the notion that we’ve done away with any of the abuses of 2008 by looking through the reports of a conservative bank and finding that there’s no There there, in terms of what they’re actually up to. sobering…

  3. I think that FDIC bank insurance is one of the reasons that banks become riskier and riskier. Their customers don’t care. Why should they? Their cash is insured up to $250k.

    It amazes me that the big mega banks are still in business and that individuals still have accounts with them. Until we as customers demand change, nothing will change. If you have an account or loan at a bank that you feel behaves unethically, switch. Ask your friends and encourage them to switch.

  4. well, switching banks is all very well up until the moment that none of the banks available to you are small or local. the continuous mergers are headed for the inevitable monopoly-defying three mega-banks. where do you stick your money then?

  5. @acm – then switch to a credit union. Most of them have more consumer friendly rates and fees.

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