I Swear There was a Bank there a Minute Ago

[Restrain]

Multiple banks, multiple accounts.

 

[Terrel L. Shields]

My late brother, a banker, used to say keep your money in either the weakest bank or the strongest. The weak ones go first and FDIC will have plenty of money. The strong ones won't go under. The middle ones are the ones who might go under when the FDIC has run out of money. (if you recall, the FDIC had a lot of money when the 1980 banking crisis hit, but went thru it all after the S & L fund went dry and FDIC picked up the slack)

 

[Lloyd Bonafide]

How will financial institutions make money now?

http://www.rgemonitor.com/roubini-m...that-the-securitization-food-chain-is-broken/

So how will mortgage brokers, banks, broker dealers, monoline insurers, rating agencies generate revenues and profits now that this slice & dice scheme has unraveled? The current market delusion that the worst is behind us for financial institutions is based on the view that most of the writedowns of the toxic assets have already been done. But this is not just a balance sheet problem. Now financial institutions have a more severe P&L problem, i.e. how to generate income and earnings from now on when they cannot originate junk any more. The entire income generating model of financial institutions – make income out of securitization fees rather than by holding the credit risk - is broken now that the generalized credit bubble (not just subprime mortgages) has burst; thus, how will these financial institutions generate earnings over time? Capital losses are one-time problems; but destruction of the income generation process is a more severe and persistent problem that will require banks and other financial institutions to rethink their overall business model of credit risk transfer. But there is no clear and sound new business model for them: going back to the old days of “originate and hold” is not fully possible while the new “originate and distribute” model has shown all of its wrong and distorted incentives, risks and systemic failures. So banks and other financial institutions will have to seriously rethink their business model and how they are going to make money: the model of slice and dice and pile fees upon fees and transfer the credit risk is broken.

 

[rcsone]

.....like they always have: interest deferrential provided by the government, increase fees, and ship the bad deals to the taxpayers through government sponsored programs........best to all..............rs

 

[Caligirl]

How will financial institutions make money now?

Credit card interest.