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View Diary: Senator Elizabeth Warren Strikes Nerve, Terrified Bankers Howl In Protest (186 comments)

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  •  About the manageability of banks (2+ / 0-)
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    eXtina, MichaelNY

    I deal with these institutions professionally.  I won't speak to the accuracy of their books, except to say that if they are carrying assets at cost -- someone tell me what the rules are these days for banks -- those valuations reflect the crap they're carrying.  In this case, Sen. Warren is probably overestimating the extent of outright bent accounting, but she's hit on a more fundamental issue that the gap between the book and market value is a fundamental operational measure of how well a bank is run.  Most non-financial businesses that want to stay in business are worth more than what they paid for their capital base: for a tech company, this would be a profound indictment by the markets.

    As to the unmanageability of banks, she's spot on.  I can attest to this part firsthand.  The four largest banks aren't coherent entities.  They are a collection of internal fiefdoms, whose borders started with the scope of the various other banks they acquired (which were also organized in fiefdoms based on their acquisitions, and so forth).  By the way, European and Japanese banks are worse.  These banks are microcosms of crony capitalism.

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