Comments on: Banks: Start From Scratch or Give it Time? http://www.ritholtz.com/blog/2008/11/banks-start-from-scratch-or-give-it-time/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Sat, 21 Nov 2009 19:59:24 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: ec2046 http://www.ritholtz.com/blog/2008/11/banks-start-from-scratch-or-give-it-time/comment-page-1/#comment-129663 ec2046 Sun, 30 Nov 2008 23:53:31 +0000 http://www.ritholtz.com/blog/?p=11009#comment-129663 I'm all for new banks. Proven incompetence (at best) is not a convincing argument to keep the old banks. I’m all for new banks. Proven incompetence (at best) is not a convincing argument to keep the old banks.

]]> By: Its_Science http://www.ritholtz.com/blog/2008/11/banks-start-from-scratch-or-give-it-time/comment-page-1/#comment-129470 Its_Science Sat, 29 Nov 2008 18:28:27 +0000 http://www.ritholtz.com/blog/?p=11009#comment-129470 I have favored the creation of new banks for awhile. It's the quickest way to restore confidence in the banking system (although there would certainly be a volatile transition period). Most estimates I have seen do not have credit fully recovering for 3 or 4 more years. Evan is correct in that you don't want to create more Fannies and Freddies, but that's easy enough to avoid. The government could simply match investors equity and give up ownership in return for putting these new banks under stricter (and perhaps temporary) regulations that will keep them safe while the other banks fail. I do think this would be a great time to start new, clean banks, except that the government keeps investing in the old banks. There's less incentive to start new banks when the government is propping up your competition. The government is simply prolonging the recovery period with its current strategy. I have favored the creation of new banks for awhile. It’s the quickest way to restore confidence in the banking system (although there would certainly be a volatile transition period). Most estimates I have seen do not have credit fully recovering for 3 or 4 more years. Evan is correct in that you don’t want to create more Fannies and Freddies, but that’s easy enough to avoid. The government could simply match investors equity and give up ownership in return for putting these new banks under stricter (and perhaps temporary) regulations that will keep them safe while the other banks fail.

I do think this would be a great time to start new, clean banks, except that the government keeps investing in the old banks. There’s less incentive to start new banks when the government is propping up your competition. The government is simply prolonging the recovery period with its current strategy.

]]> By: leftback http://www.ritholtz.com/blog/2008/11/banks-start-from-scratch-or-give-it-time/comment-page-1/#comment-129458 leftback Sat, 29 Nov 2008 17:44:49 +0000 http://www.ritholtz.com/blog/?p=11009#comment-129458 Evan has a problem with it because he realizes that Dennis is right, and that WHEN (not if) new clean privately-owned banks are started, they will have a huge competitive advantage (no bad paper, no over-priced real estate assets, will lend with limited leverage, can charge high rates and offer depositors safety and interest above that of its wounded competitors). Where can I buy my shares in CLEANBANK? This is such a great opportunity you can expect the financial establishment to fight any newcomers tooth and nail. I think the short squeeze in banks and CRE has run its course. Citi is about to find out there were really no buyers. Just sellers covering. Evan has a problem with it because he realizes that Dennis is right, and that WHEN (not if) new clean privately-owned banks are started, they will have a huge competitive advantage (no bad paper, no over-priced real estate assets, will lend with limited leverage, can charge high rates and offer depositors safety and interest above that of its wounded competitors).

Where can I buy my shares in CLEANBANK? This is such a great opportunity you can expect the financial establishment to fight any newcomers tooth and nail.

I think the short squeeze in banks and CRE has run its course. Citi is about to find out there were really no buyers. Just sellers covering.

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