I don't agree. There are many instances where using a boutique or smaller institution is better for your business to run.
My company used to bank with Bank of America. It was awful. They seemed to have no concept of how to work with small business or a tech startup. We moved to another bank (not svb) and it's been a much better experience.
Only leveraging the giants of a given industry is not good for innovation nor specialization.
It does seem as though larger banks can only work with entities that fit inside their self-described personas. If you do not align exactly with one of their personas - good luck.
At least that is what I have seen here in Canada, I imagine the US is very similar in that regard.
Yes, there is safety in size. But operational capabilities of companies using the big banks would be cut as well.
To draw an analogy, should every business owner with physical goods only sell and distribute their goods through Amazon and/or Walmart? Yes, their size provides many benefits, but also has dramatic costs to their business and impacts how customers are served.
This is a very strange take. You’re arguing for the consolidation of wealth into a few giants? These giants then in turn will own a significant portion of the economy, will be subject to far less competition, will stagnant any given area based on what they’re willing to invest in or what they’re not (as a service and in the economy), make them extremely capable of owning politicians and setting the directions of the country, and enable few to gain the experience and opportunity that comes with going up the banking ladder because few seats exist.
Local community banks make it far easier for farmers and coffee shops to get loans. Local community banks keep money locally and grow locally. The consolidation of banks is a problem to avoid, not desire.
Wait so, you're in favor of the bank being bailed out here?
The phrase "too big to fail" doesn't mean it's impossible for it to fail; that's not a thing. It means the govt/public feeling obligated to bail it out when it does fail because the public thinks they're so dependent on it that they're worse off of they let it fail.
The government, as we saw in 2008, won't allow those banks to fail. That's literally what "too big to fail" means. If the government doesn't have the ability to keep such banks afloat, then we have worse problems.
By ‘afloat’, do you mean, “keep the depositors whole” or “keep the bank operating” or both?
A lot of confusion centers around the assumption that any bailout will be for the bank’s operations, not for the depositor’s deposits. That’s perfectly valid confusion - historically it’s been the latter! - and the FDIC isn’t willing to talk about deposits yet, either.
Why America has 4000 banks is beyond me. In my country they all consolidated in the 60s and 70s into a half a dozen giants.