Last week, Matt Yglesias wrote a post about what he calls “America’s Microbank Problem”: this country has far too many banks, he says, and they’re far too small. A rebuttal soon came from Rob Blackwell of American Banker, who called Yglesias “dead wrong”. This is an argument which clearly needs to be adjudicated! And in this case, I’m afraid, Blackwell wins.
It’s undeniably true that for various reasons, most of them regulatory, America has way more banks than any other country. Take away that history of regulations, and we’d have the “dozens” of banks Yglesias wants, rather than the thousands we actually have. But, would that be a good thing or a bad thing?
Yglesias says it would be a good thing, on the grounds that America’s existing “microbanks” are poorly managed; can’t be regulated; and can’t compete with the big banks. But Blackwell is absolutely right
The Federal Reserve's "QE3" purchases of long-term U.S. Treasury bonds and agency mortgage-backed securities have been running at a net pace of $85 billion a month since September 2012. In May 2013, when the Federal Reserve Board Chairman Ben Bernanke made the open comment about the Fed's intent to start "tapering", the market reacted with a violent jolt as interest rates spike on just his comment. Most economists were surprised when the Federal Open Market Committee decided not to begin tapering the bond purchases following its September policy meeting.
The decision to wait could have been highly influenced to the verbal debate between the President and Congress going on about the budget and debt ceiling that increased the jitters in the market. The market dropped through September and only recovered after the agreement was reached. The partial shutdown of the federal government during the first half of October and