Jul 302012
 

Former Citigroup CEO Sanford “Sandy” Weill has ruffled some feathers by suggesting that we should break up the big banks, separating investment banking from commercial banking as was the law under the Depression-era Glass-Steagall Act.  It’s definitely an interesting idea coming from “The Shatterer of Glass-Steagall,” particularly since he didn’t agree in 2010 when his former co-CEO at Citi, John Reed, apologized for his part in taking down the act.

Plenty of people are going to weigh in on the subject now, but how about we ask a source that hasn’t been a player in tanking the world economy?

Enter the I Ching…

The adornments must be stripped away.  Sounds a little bit like something you’d expect to hear from an ancient oracle, but that’s what it is.

The situation has been about appearances.  Bigger was thought to be better and so many banks became four.  But there is no too big to fail.  The bigger they come, the harder they fall.  That’s general policy.

Substance is more important than packaging.  If only the banks had consulted the I Ching before slicing and dicing all those mortgages.  And before they turned from stodgy suits into wild gamblers.  It took pushing us to the edge to do it, but trust in these institutions has faded.

Strip away the dead wood.  Perhaps it will be the Safe, Accountable, Fair and Efficient (SAFE) Banking Act that reigns in leverage and places a cap on how big these dead trees can be.

Rely on our own simple efforts.  Like a few other industries, trust is flowing to local alternatives where profit and expansion aren’t the primary concerns.

Or at least that’s one interpretation.  You could read more about the two hexagrams above with the Wilhelm translation to dive further into this reading or check back with the I Ching to see what it thinks today.

[I Ching reading via Psychic Science, Trust charts from the Chicago Booth | Kellogg School's Financial Trust Index]

May 092012
 

No one is happy with Bank of America.  As their annual shareholder meeting draws to a close in Charlotte, NC today, four days of protests will be reaching their height while BofA’s stock continues to languish at lows it has not seen since the early 90′s.

There have been calls to stop doing business with Bank of America.  There’s a petition and song about breaking up the bank.  It was ranked #5 among America’s least reputable companies and named the second worst company in the country two years in a row.  They tried to raise debit card fees, backed down from the resulting outrage, and yet are already working more fees back in.  And now, as the possibility of their own credit rating getting a downgrade looms, their CEO’s pay has quadrupled

Where do you even begin cleaning up that mess?  An apology would be a start, but this one turned out to be a bit of economic fan fiction.  Meanwhile, Bank of America continues doing business, such as being the largest financier of the U.S. coal industry, which earned their stadium in Charlotte a recent rebranding campaign.

Aside from generating 42% of the electricity produced in the U.S. during 2011, there’s not much good to say about coal either.  If you’re tired of the usual laundry list of coal’s consequences, then maybe a report from Harvard pegging the best estimate of coal’s annual cost to the U.S. public at a third of a trillion, $75 billion in Appalachia alone, might be of interest.

The most alarming thought, however, is the simple combination of a desperate bank and a literally dirty business.  If no one is walking away from money on a good day, Bank of America will likely be the last to admit that it’s $4.3 billion coal business is as toxic as it’s purchase of Countrywide, a contender for the worst deal in history.  …  That’s why they’ll probably need a little help.

If you’d like to join in breaking the news to them, there’s a protest going down, a petition going around and a good chance you haven’t heard the end of this story.

[Stock Chart from Google Finance, Image from Rainforest Action Network via WeArePowerShift.org]

Apr 192012
 

What if this really was a letter from Bank of America’s CEO offering up a confession?  Go ahead, pretend…

It’s not the real McCoy of course.  Unknown person(s) have taken it upon themselves to write this letter for Bank of America and you can find out more about why at YourBofA.com.  The site has been set up to solicit ideas and encourage creativity in reimagining your Bank of America, including a bank ad meme generator, for which Ape Con Myth wrote a few entries.  Click through to share your favorite!

In situations like this, it’s important to start out light.

Ease into your subject.  What is the point of a bank in the first place?

If a bank is a business, then should banking be a mutually beneficial arrangement?

Bank of America was a presumptuous name from the start.  General Bank might have been a more appropriate choice, but they wanted the whole enchilada.  The question is, was it a self-fulfilling prophecy that they turned out to be as bad with their money as us?

[Your Bank of America via Forbes]
[Related: Hungry, Hungry Hippos (or Banking Mergers 1990-2009]

Feb 022012
 

From Mother Jones:

The nation’s 10 largest financial institutions hold 54 percent of our total financial assets; in 1990, they held 20 percent. In the meantime, the number of banks has dropped from more than 12,500 to about 8,000. Some major mergers and acquisitions over the past 20 years:

big-bank-theory-chart-small(click to enlarge)

It might look like a sports bracket, but competition requires competitors and 33 of these players aren’t coming back next season.  The object is to best other companies, not eat them.

For a similar look at the investment banking game, see the New York Times’ Wall Street Vanishing Act chart.

[Chart from Mother Jones via /r/Economy]