“Too Big To Fails” Have Stopped Being Banks

No Longer Focused On Deposits Or Loans

Bloomberg reported last month:

Banks don’t have a need for deposits, and the demand for loans by households and firms is weak,” Niels Storm Stenbaek, chief economist at the Danish Bankers Association, said in a phone interview.

Wait … what?

Banks don’t need deposits?   They’re not giving many loans?  Isn’t that what banks do?

If they’re not collecting deposits and making loans, what are they doing?

In reality, big banks aren’t really acting like banks anymore.  Big banks do very little traditional banking, since most of their business is from financial speculation. For example, we noted in 2010 that less than 10% of Bank of America’s assets come from traditional banking deposits.

The big banks are manipulating every market.   They’re also taking over important aspects of the physical economy, including uranium mining, petroleum products, aluminum, ownership and operation of airports, toll roads, ports, and electricity.  And they are using these physical assets to massively manipulate commodities prices … scalping consumers of many billions of dollars each year (more here and more).

The evidence demonstrates that the big banks have essentially become huge criminal enterpriseswaging warfare against the people of the world.

Image by William Banzai

Apart from the above-described manipulation, virtually all of the big banks’ profits come from taxpayer bailouts and subsidies  (see this, this and this).  Why don’t they need deposits? Because the taxpayers are showering them with money.

And they don’t need deposits because – as is now admitted by the mainstream – banks create money out of thin air.  In other words, banks don’t need deposits in order to make loans.

At the same time,  the big banks have sat on the money the government threw at them – with the encouragement of the Fed – instead of loaning it out to Main Street to kickstart the economy. As we noted in 2012, small banks are much more interested in making loans to the little guy than the TBTFs:

USA Today points out:

Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid, a USA TODAY/American University review found.

Dennis Santiago – CEO and Managing Director of Institutional Risk Analytics … notes:

The vast majority of this contraction of credit availability to American industry has been by the larger banks ….

Fortune reports that smaller banks are stepping in to fill the lending void left by the giant banks’ current hesitancy to make loans. Indeed, the article points out that the only reason that smaller banks haven’t been able to expand and thrive is that the too-big-to-fails have decreased competition ….

BusinessWeek notes:

As big banks struggle, community banks are stepping in to offer loans and lines of credit to small business owners….

Fed Governor Daniel K. Tarullo said:

The importance of traditional financial intermediation services, and hence of the smaller banks that typically specialize in providing those services, tends to increase during times of financial stress. Indeed, the crisis has highlighted the important continuing role of community banks….

[Federal Reserve Bank of Kansas President] Thomas M. Hoenig pointed out in a speech at a U.S. Chamber of Commerce summit in Washington:

During the recent financial crisis, losses quickly depleted the capital of these large, over-leveraged companies. As expected, these firms were rescued using government funds from the Troubled Asset Relief Program (TARP). The result was an immediate reduction in lending to Main Street, as the financial institutions tried to rebuild their capital. Although these institutions have raised substantial amounts of new capital, much of it has been used to repay the TARP funds instead of supporting new lending.

On the other hand, Hoenig pointed out:

In 2009, 45 percent of banks with assets under $1 billion increased their business lending.

45% is about 45% more than the amount of increased lending by the too big to fails.

Indeed, some very smart people say that the big banks aren’t really focusing as much on the lending business as smaller banks.

Specifically since Glass-Steagall was repealed in 1999, the giant banks have made much of their money in trading assets, securities, derivatives and other speculative bets, the banks’ own paper and securities, and in other money-making activities which have nothing to do with traditional depository functions.

Indeed, the Too Big To Fails are doing everything they can to fight the availability of low-cost loans for Main Street and the little guy.

The bottom line is that we don’t need the big banks.   Indeed, top economists, financial experts and bankers say that the big banks are too large … and their very size is threatening the economy. They say we need to break up the big banks to stabilize the economy.

This is especially true since the monsters are growing larger and larger … and have mutated so much that they’re no longer even behaving like real banks.

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  • jadan

    All banks, big and small, whether they are lending to Main Street or funding speculation and the derivative market are creating the money supply that fuels the American economy. We need them. This economy would collapse if the big banks no longer funded speculation. After all, speculation is what a financialized economy is all about and the big banks create the volumes of cash to keep the stock markets and other speculative venues growing. It isn’t enough to simply break up the big banks, either. No matter what you try to do, big banks will spring up again as quickly as you break them up. We can’t fix the system we have. It has to be fundamentally changed. Banks, big or small, should no longer create the money supply. The monetary system should be fundamentally changed. The money power should not be relegated to a private corporation that issues its own currency and loans it to the government. Stop! No more debt money! The creation and management of the money supply is a function of the US Treasury, not the private Federal Reserve and its client banks. No reform and no sustainable financial future is possible unless the monetary system and the role of banks is fundamentally changed….

    • bitterclinger

      World reserve currency status for the dollar has been the heroin that got all of the politicians as well as those at the Federal Reserve addicted. The people have all paid the price for it via the largest theft of wealth that the world has ever seen. When the dollar loses that status it all will change overnight, no more printing money out of thin air, at least not for America, some other country like China will start up their printing presses and the cycle will start again. the Federal Reserve needs to be shut down. Careful with the talk of fundamental change, that hasn’t worked out at all in Washingtonn DC, we need some good old fashioned reforms.

  • Poke

    Jadan….you’ve got the groove. Am on board with your views. No bank has the privilege to speculate {high-risk] with a depositors monies…
    NO land flips, no derivatives, no oil/gas exploration, no third-world underwritings/intra-structure/etc…….all these are hinged on dice being rolled and no depositor is given a choice of this risk.

  • giovanni fonti

    I’am in full support of your analysis however the big question is” what are we going to do about it”

  • Robin Williams

    Funny that high finance people think they’re so smart just because they have a monopoly on a money making machine. As is America is18 trillion dollars in debt and the standard of living among Americans has been declining for decade.
    They have made life very good for themselves, but as leaders of the economic world have proven themselves complete failures when the average American should be enjoying a better life than ever.
    They’re failures and need to be called such.
    And more importantly they need to be tried for the crimes.

  • Robin Williams

    Here’s an idea for a law.
    Any new money created by the treasury/federal reserve, is to be handed directly to the American people for their use.
    Therefore if elite want QE, then make let them write a check to Joe citizen, and not to themselves.
    So if they want 3 trillion to stimulate the economy (as they claim) then send every man woman and child in the US a check for about 10,000$ and let them chose how to stimulate the economy.

  • LifeTraveller

    First and foremost, one needs to understand today’s “banks” are money generating machines for the benefit of a select few, they don’t give a damn about the “average person”. The founders realized this, which is why our money is supposed to be created and handled by the treasury not a “private banking cartel”. Take a look at what Iceland has done, and you’ll get a model of what can be done… Greece has an opportunity to do the same.. I’d love to see it.

  • Uncle_Meat

    So there is this corrupt banking industry surrounded by a corrupt police state. The good people of this country are now going to become slaves to the scum of the earth. There is really no difference between corrupt bankers and corrupt cops. The sad part is there is no more morality in either profession. There are no more good bankers as there are no more good cops. They will all pay dearly very soon.

  • Sam Nelson

    Within reason.

    Speculation has it the Rothschilds are wealthy to the extent of five hundred trillion dollars worth of wealth. The Queen, the Vatican, the Rockefellers, are sporting trillions of dollars worth of wealth, and, I am sure, there are Asians worth trillions. The American government has investments in just about everything going, in just about every major corporation in the world, to the tune of trillions of dollars worth of wealth. Question is why are people on Earth dying from hunger?

    The answer to that question was provided thousands of years ago, the people themselves provided the answer, which is, when people are given a living rather than earning a living then more and more people become dependent, more and more people become lazy and useless.

    The rich are rich because they never quit, they can have it all and still they will be driven to gain more and more. Rich people are special, unique, few and far between, certainly not enough of them to work the fields and tend the markets so we have to contribute something. Therein is the rub, how much work for how few dollars? The workman’s greed, is destroying the world.

    The trick is caring but not destroying, and that trick hasn’t been found out yet. I read an article about Thanksgiving in America, the first Thanksgiving or thereabouts, the article insisted people died of starvation then because they were too lazy to work the fields and provide for themselves. In fact a diary kept by one of the citizens then said just that.

    I believe if the trillionaires turned over their fortunes to “the people” in a few years the whole of the society, rich and poor would be starving to death. It is in the human nature to be lazy, to be shiftless, to expect the world owes it a living; made in gods image, certainly has negative connotations to it.
    Truth is there are no gods, we are made in the image of other creatures, and all of them need to eat, all of them need to have shelter, all of them will if allowed become lazy and self centered.

    I don’t like what is going on in the world today, what the rich seem to have in mind for us not rich, but, I don’t have any answers to the questions either. The questions asking how to provide for billions of people and still have a world worth living in…Industry is destroying the world while trying to feed the world, yeah, a few do get rich, but at what cost to the Earth are we living. I think right now is the good time, who can know what tomorrow will bring.
    As for myself: My wife and I live like royalty though neither of us work. I am retired my wife is going to school. Basically we have the food we want, we have Ruko, we go to bed when we want and get up when we want. We own our home and two old cars; except for Obamacare and other sky high Insurances, we would have a newer car and an even better living. We don’t drink alcoholic beverages, we don’t use any drugs. We don’t smoke cigarettes. Basically, we just hang around the house, ride our bikes, go into the big city every now and then. A simple life, but wonderful.

    Yes, we are very lazy. We keep our property up, we keep our kitchen clean, we keep our clothes clean, but, working a job, forget it, that would take so training. If everyone lived like my wife and I do the world would grind to a halt; we know, we, are chosen.
    What is laughable is: I spend a lot of time on the Internet complaining about the rich, the jews, the christians, the muslims, the government, just about everything there is to complain about I complain about. It’s the mood. If I am in a thankful mood I write as above, if I am in a not so thankful mood I write quite different. Ate up with jealousy, I act like I would like to have a boat, a plane, a mansion, all the stuff the rich have, but I know, I would just waste it away because I am so lazy. I don’t like going to the store let alone anyplace else, I sure don’t want a lot of human company, I wear simple clothes and if I were a trillionaire I wouldn’t change my dress style. I complain because I can, that’s not right I know, but even lazy people like a little attention now and then.
    Anyway, what I guess I am asking of the rich is this: don’t make me want to be like you, I am perfectly happy being just the way I am. Think about that…

  • dan

    The banksters (Black Magic Atlantean Sorcerers) go back to the Templars. This master, slave system has always been there, but people were taught to see a different system. They make history happen and no amount of crying reform or change will do the trick. Sorry folk’s we’ve all been hoodwinked!! JP Morgan is a bloodline related to presidents: Roosevelt, Pierce. Taft, Hayes. Cleveland, Coolidge and Druid witch Churchill. They have agents in ALL sectors.

  • Grinling Gibbons

    What everyone fails to mention every time is the whole world banking system is run by only One Benking Group The Rothschilds, so let us start with the UK First Bank Of England, London Stock Exchange, Barclays Bank,Lloyds Bank, & T S B Bank, H S B C, Santander, Bank Of Scotland, Plus Other Companies To Many To Mention,Germany Deutche Bank & Companies, Now America, Bank Of America, Federal Reserve, JP Morgan,Wells Fargo,Citi Bank,Walt Disney, Mc Donalds,Most Of Hollywood, Most Of The TV Station & Radio & Newspapers, & I Have Only Scratched The Surface, & Lets Not Forget The United States Is A Private Registered Company Belong To The Crown Property Company,& All Taxes Collected Goes Into The Federal Reserve Then Into The Rothschilds Bank, & America,s Debt Belongs To The Federal Reserve & The Rothschilds Bank Owns The Fedaral Reserve Therefore It Is The Rothschilds Debt & Not Americas Debt As Per The Companies Act, Those In Power Wether Good Or Bad Must All Know About This Disturbing Information So Now That I Have Made This Public Thats See If Anyone Has The Balls To Respond & Stop America & It,s People Know Who Owns What & Who Should Pick Up The Tab & It Aint The People Of America Rothschilds & The Gang Of Four Have Been Stealing There Money To Feather There Own Nest Now You Know Why That Evil Rothschilds Have Over 500 Trillion Dollars Thats The Money Paid By The People In Taxes But Has Gone Into The Rothschilds Bank The Whole Lot Should Be Tried For Treaon Under The Misapropation Of Funds & Causing Hardship & Theft From The American Government, I will Leave The Legal Team Of America To Work Out Just How Many Laws They Have Broken & What They Can Be Charged With & How They Will Pay Back The Money To The Government Then America Will Be Free From Debt,

  • Jeff R

    Nothing surprises me about corrupt corporations and banks anymore.

  • Kinch

    Again, banks should not have been allowed to merge and get ‘too big to fail’. It didn’t used to be this way. Political payoff (campaign contributions). STATES must stop this with amendments to Constitution

  • Charles Savoie

    The man in the photo is George Baker Sr.—not J.P. Morgan, and Baker was easily the wealthier of the two. Both however were members of “The Pilgrims Society,” of which I have, by sense of social obligation, become the world’s leading information source, with my great associate, Dutchman Joel Van Der Reijden. The consolidation of the big banks—Morgan Chase—Citigroup—Bank of America—Wells Fargo—Bank of New York Mellon—is a Pilgrims Society project. Were a roster available in it would be names of directors and execs of these megabanks—that is the pattern seen in leaked lists, 1914 to 1980. This is an influence network of which Van Der Reijden said, “A truly awful amount of influence has been concentrated within this group.” Interested parties are directed to my free access research in the public interest, “The Silver Stealers” and the larger series, “The Silver Squelchers” and “Silver Suppressors Hiding In The Dark,” this does not limit its overview to only the monetary metal, silver, but covers very much more territory. I met one of these Worthy Gentlemen at a reception subsequent to a university speech by the British U.N. Ambassador, Sir Ivor Seward Richard. His maternal grandfather was William Seward, the secretary of State who made the Alaska Purchase from Russia in 1867. Ivor was unhappy to see The Pilgrims emblem plastered on the front of my T-shirt and the running tape recorder.

  • Gonna gitcha suckas

    the scam will be over soon enough – that’s why they’re buying all their getaway locations – they know we’ll be coming for them and unless they’re on mars, we’re gonna get them sooner or later.