From WashPo: A new paper from Patrick Sims of Hamilton Place Strategies,
a policy and communications firm led by Bush administration White House and
Treasury official Tony Fratto, amounts to a case for the big banks. (Hamilton
Place counts major banks and their trade associations among its clients). The entire paper is worth reading, but here
are some of the arguments that I believe have the most merit.
The first argument is also the simplest. This is a huge and
complex global economy. With trillions of dollars in global trade and companies
with hundreds of billions in assets, it takes giant banks with a global reach
to supply them with the financial products they need to do business.
The paper dismisses research that suggests there are no real
economies of scale in banking above $100 billion in assets. Sims argues that
this does not take into account that the megabanks are doing many types of
business that smaller banks don’t do, which makes the comparisons moot. Big
banks provide trade finance for companies doing business overseas, underwrite
stock and bond offerings, sell products to let companies hedge against
fluctuations in currencies, commodities and interest rates — all activities
that enable the giant global companies to do their work....
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