Bloomberg: US banks will close 5,000 branches, Whitney says

[Sharky]

Not to mention cutting 80,000 jobs....


US banks will close 5,000 branches, Whitney says

U.S. banks will close 5,000 branches in the next 18 months as they face profit declines from decreased loan demand and lower fee revenue, said Meredith Whitney, the former Oppenheimer & Co. analyst who now runs her own firm.

Banks face an “uphill battle” in generating loan growth as consumers reduce debt and will receive less revenue from fees because of new regulations and the lack of a securitization market, Whitney, 41, said in a report dated Nov. 18 and obtained today by Bloomberg News.

Whitney has said earnings pressures and new regulation will lead to some lower-income customers losing access to banking services. The number of households without access to the “traditional banking system” will rise to 41 million by 2015 from 30 million in 2009, she said in the Nov. 18 note.

“The most regrettable unintended consequence of some of the quickly written regulatory reform, we believe, will be the inevitable ‘debanking’ of the U.S. financial system,” said Whitney, who started New York-based Meredith Whitney Group after correctly predicting Citigroup Inc.’s dividend cut in 2007. “Fewer ‘bankable’ customers will contribute to the trend in fewer bank branches.”

Whitney also sees slower growth in investment banking. U.S. securities firms may cut as many as 80,000 jobs in the next 18 months as revenue growth slows, she said in September.

(continues)

From: http://www.bloomberg.com/news/2010-1...tney-says.html

[tsetsefly]

Re: Bloomberg: US banks will close 5,000 branches, Whitney says

what will be funny is when government will then attempt to put and end to this and possibly rescue more banks, cleaning up the mess they created... Fact is many of the policies put in place now affect a lot of banks that had little or nothing to do with the current crisis, but our politicians always fail to take into account possible consequences of their policies...

[jneal3]

Re: Bloomberg: US banks will close 5,000 branches, Whitney says

“The most regrettable unintended consequence of some of the quickly written regulatory reform, we believe, will be the inevitable ‘debanking’ of the U.S. financial system,” said Whitney, who started New York-based Meredith Whitney Group after correctly predicting Citigroup Inc.’s dividend cut in 2007. “Fewer ‘bankable’ customers will contribute to the trend in fewer bank branches.”

Isn't the 'banking' of the economy part of what got us into this mess in the first place? For most Americans, making it harder to come into contact with a bank is like making it harder to come into contact with the plague.

[don]

Re: Bloomberg: US banks will close 5,000 branches, Whitney says

Fact is many of the policies put in place now affect a lot of banks that had little or nothing to do with the current crisis, but our politicians always fail to take into account possible consequences of their policies...

Keep in mind the goals of Big FIRE. The TBTF whales eating up the small banks like krill. Nothing unusual here.

The most regrettable unintended consequence of some of the quickly written regulatory reform, we believe, will be the inevitable ‘debanking’ of the U.S. financial system

Does that pass the knee-jerk anti-regulation smell test? Not that I endorse the "reforms" that were passed.

[Milton Kuo]

Re: Bloomberg: US banks will close 5,000 branches, Whitney says

Isn't the 'banking' of the economy part of what got us into this mess in the first place? For most Americans, making it harder to come into contact with a bank is like making it harder to come into contact with the plague.

The banks want intermediation because it provides a layer of insulation from fraud and deniability of wrongdoing. The mortgage brokers during the housing bubble are a prime example of how the banks used intermediaries to do the really dirty work of creating fraudulent paper. After the house of cards collapsed, the banks claimed they were tricked by a fraudulent intermediary; they blame everybody else as the cause of the crisis.

[mmr]

Re: Bloomberg: US banks will close 5,000 branches, Whitney says

At this point the TBTF banks are so big that it doesn't really matter to them whether the smaller banks fail or succeed - they're more like ants than krill. The small banks are competing for a different type of customer, and the big banks generally view buying small banks as a waste of time. (Look at most of the recent FDIC deals - almost none of the big banks have bothered to bid for failed community banks, even when the FDIC guarantees a profit by agreeing to absorb almost all of the credit losses.)

Not too sure about the debanking argument either - the big banks will continue to benefit from processing and interchange fees from all of those people using electronic benefit cards, among other things.

[snakela]

Re: Bloomberg: US banks will close 5,000 branches, Whitney says

Isn't the 'banking' of the economy part of what got us into this mess in the first place? For most Americans, making it harder to come into contact with a bank is like making it harder to come into contact with the plague.

I was thinking contact with bank is more like contact with a coke dealer.

[blazespinnaker]

Re: Bloomberg: US banks will close 5,000 branches, Whitney says

Some policy needs to get written this way as it's impossible to predict. Write the law, if biz contracts, then kill the law .. If biz nicely adapts than keep the law.

It'd be nice if we could write consumer protection law and have some sort of amazing crystal ball.. But no dice.

Banks were / are being predatorial .. Something had to be done.