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Are Banks Utilities?

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Scenario: You've been saving for five years with the intention of buying your dream home, and since you're conservative with money, you're sitting on an old school LARGE down payment of $60,000 cash. All parties are ready, the moving plans are made, and your old house is already sold. You wake up on transaction day and head to the bank to procure your cash. When you arrive you're stunned to see the doors locked, with a note stating that they have ceased operations effective immediately. You are given a contact number for the FDIC.

In a panic move, you try the ATM machine for some walking around money… it's turned off.

This has just ruined your entire week, potentially your month. Since you now have to proceed through bureaucratic hoops in order to secure your own cash (the cash that belongs to you, after all), the entire home process is off, pending a resolution. You call the moving company to cancel, then the purchasers of your current home with the hope that you can stall for a while.

We all have a reasonable expectation that we can access our own money whenever we need it. Most of us take this for granted on a daily basis. We swipe the card and it works. Every time.

Since we all should know by now that this cavalier approach is misguided, I will float a new question:

Should the access to our money on a daily, even hourly, basis be as regulated as the power that flows into our house? Should we be stripping as much uncertainty out of the process as possible, even if it means over-regulating?

A prominent writer (and pioneer of derivatives) believes we now have no choice.

On Wednesday's Charlie Rose, Nassim Taleb, author of the acclaimed The Black Swan, proposed the idea that we are entering the era of "Capitalism2." After the failure of the highly speculative and over-leveraged "Original Capitalism," we are being forced by the current economic collapse to adapt a new way of looking at banking in America.

In Taleb's words:

It will be very different. Number one, banks will be utility companies, because we no longer will tolerate privatizing the gains and socializing the losses anymore. If you and I are going to bear the losses of bankers, we don't want to pay them bonuses for five or six or seven years, and then bail them out. Banks are going to converge with utility companies, because if you go to Detroit or LA you want to be able to get cash from a cash machine. It's a utility.

As I read it, Taleb's idea is that large banks, by accepting massive Federal financial help as a backstop to failure in 2008, are essentially marrying themselves to heavy government involvement and regulation in 2009 and beyond. They are accepting that bargain on its face, and as a result will be viewed by the public as a protected industry, much like the electric or natural gas companies. Banks are trading future risk and big profit for the right to continue to exist. As public utilities.

Since Americans (and this applies elsewhere in our interconnected global economy) expect to have access to cash and checking accounts in the same way they expect the light bulb to go on when they hit the switch, they will demand that these institutions be prevented from failure. They want the lights to stay on. The cost for banks? Competition and profit.

As Taleb points out, there will still be risk-taking. Banks will simply no longer be allowed to operate primarily as "sophisticated" investment vehicles. They will return to their old school job of charging fees for deposits and service.

The risk takers — upside investors (read: business starters and venture capitalists) — will still be around, but with the implicit knowledge that they WILL NOT be bailed out.

He continues, "People will be able to take risks, under the condition that society will not bail us out. You will have less debt investment, and more symmetry."

By symmetry Taleb is referring to risks that afford a balanced share of upside and downside. Meaning, those who wish to take greater risks will be forced to put more on the line on the downside. This is in contrast, he believes, with the recent era of unbalanced risk — some people taking much of the debt with little upside vs. those that risk little but stand to gain at a much higher clip if successful.

Is "Capitalism2" – where my bank is as bland as my natural gas provider – our only path after the economic lessons of 2008?

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About Joshua Johnston

  • http://www.fontcraft.com/rod/ Dave Nalle

    Interesting article, Dave. Not sure how boring natural gas companies are, though. Once you get away from major cities it’s the wild west for those of us using propane. Multiple suppliers, lots of market competition – hell you can even get it at Home Depot or the local grocery store in a pinch.

    But that’s all really beside the point. The argument that banks become part of the public trust when they start accepting services and support from the government – even if only FDIC insurance – seems awfully valid, even if we don’t like it much. The particularly irritating downside of this is that it means more government interference in the banks, and there’s already way too much.

    What really ticked me off earlier this month was that I deposited a sizeable check from a client and because it was over a certain dollar amount they decided to hold it for the incredible span of 7 business days for part of the total and 10 for the remainder. And this is something they’re required to do by the feds because of concern over fraud and drug and terrorist money. This despite the fact that they could verify the funds in a matter of seconds electronically. If I’d deposited a check for $2000 they’d have given me access to all of it immediately, but because it was over (I think the cut-off is currently $3000), they gave me only $100 and held the rest for almost two weeks. Ridiculous.

    More government involvement means more government intervention and more bullshit interference with our finances.

    Dave

  • bliffle

    One might well ask why the feds have the brass to interfere in the flow of your money. It’s one thing to spy on that money, it’s another to hold it up like that.

    When I was a lad we used to say that could only happen in (shudder) Communist Russia.

    Now we have it right here. Brought to you by Good Republican Americans.

    Control Freaks: They’re everywhere.

  • Baronius

    The argument behind regulation of utilities is that they are natural monopolies. They will always be able to produce the next unit of, say, energy cheaper than a competitor. That’s not the case with banks, so they shouldn’t be treated as utilities. Anyway, who says that this credit hiccup constitutes the failure of “capitalism1″?

  • Clavos

    Dave #1,

    I ran into the exact same problem last month.

    I sold a fairly substantial boat which closed on November 25th. My bank did the same as yours, except that they said all deposits (not necessarily just individual checks) in excess of $5,000 will be held. They released it to me in three stages: $100 immediately, then $4,900 after five business days, with the balance after ten days from day of deposit.

    I only got full access to my funds a few days ago.

  • http://www.skepteye.com Dave Johnston

    Good comments…

    @Dave Nalle – my bank recently began doing a very similar float routine as yours on almost all significant deposits, and the first time you notice it when you’re depending on using the funds can be quite frustrating. In some ways this type of policy actually encourages customers to use their open lines of credit for liquidity while waiting for their actual money to clear…think about that one. Not really a pro-consumer approach in the long haul.

    I think Taleb’s view that we’re moving to a society that welcomes government regulation to “prevent risk,” because the ATM is a utility, is quite frightening.

  • pablo

    Re 1, 4, and 5

    Velcome to the New World Order fellas. Oh and a special link just for the cynical jabber Clavy, how the New World Order is now being taught openly in public schools. New World Order being taught in public schools

    Gary CFR Hart, one of their chief minions, and one of the creators of the first USA Patriot Act along with former US Senator Warren CFR Rudman, openly proclaimed within a week of 9/11 that this would be a perfect time to bring in what former President George W Bush called the “New World Order”.

    When recently asked about it a Border’s book signing he denied ever saying it! Talk about being in denial and being a liar Hart takes the cake, one only has to videogoogle Hart and new world order to see his famous original quote.

    So you boys, Nalle and Clavy keep on denying the obvious, I could give a rat’s ass, but just like to rub your face in it as it gives me pleasure (I know I am a sucker for cheap thrills), as these globalist fascists get ready to roll right on over ya boys. Have fun! I sure am, hehehe.

  • Clavos

    I’m a globalist too, pablo…

    [Clavos, please be a good boy and don’t mess with commenter names.]

  • Cindy D

    Dave,

    And this is something they’re required to do by the feds because of concern over fraud and drug and terrorist money.

    The bank is lying to you if that is what they told you.

    My funds turn over within days regardless of size (even check amounts of about $8500). Not all accounts at my bank turn over in days. And our account at another bank turns over like yours, not withing days but with x amount then more at x days, then 10 days, blah, blah…I don’t even pay attention because it’s too long. That is why that bank only gets our payroll account.

    Preferred customers can negotiate and get speedy turnarounds. We have this arrangement with one bank. No laws at all interfere with it. It’s the bank’s decision, whether they find it lucrative to give you preference or use your money without you being able too.

    It’s a Capitalism thang. Ask around (go through a manager) you can do better.

  • Cindy D

    Pablo,

    I am diligently working on an article. I guess globalism will be the focus. Because there are so many ugly facets of Capitlaism, but none has caused more harm and destruction of rights than globalism.

    Stay tuned. I’m still a ways away having not only gotten the flu, but I am also somewhat overwhelmed by what to include and what to let go. Besides that I end up reading for days and days before I write anything at all.

    Besides, my computer and my router have both decided to play tricks on me. Damn technology.

  • Cindy D

    …but none has caused more harm and destruction of rights than globalism.

    Well, they have, but nowhere is it easier for even the feebleminded to see clearly.

  • http://www.skepteye.com Dave Johnston

    If by “globalism” we are talking about more people trading more goods and services across the entire globe, in the manner they so choose and at low tariff/taxes…then I am a fan.

    If we mean supermegamassive legislative bodies and regulation, then not so much.

  • bliffle

    in re: #11 — Dave Johnston:

    How can globalism and wider trade NOT lead to more massive international controls?

    The very traders and customers will demand it.

    Like control of armies from distant capitals to ‘protect’ traders as they encroach on less favored traders. To suppress rebellion as mere citizens complain of traders raiding their natural resources, polluting their streams and filling the atmosphere with soot.

    Armies from distant lands who look different, don’t speak your language, and don’t share your values. They may enjoy raping your women and killing your children. Or maiming them by cutting off arms.

    Once globalized, you will own nothing. You will have sovereignty over nothing. You will be enslaved.

    Good luck, sucker.

  • Clavos

    Armies from distant lands who look different, don’t speak your language, and don’t share your values. They may enjoy raping your women and killing your children. Or maiming them by cutting off arms.

    Once globalized, you will own nothing. You will have sovereignty over nothing. You will be enslaved.

    Take your meds, bliffle, you’re going off the cliff of hyperbole again.

    And just out of curiosity, over what do you “have sovereignty” now, besides your own home (and even your home is subject to taxation and can be taken away from you for failure to pay the taxes)?

  • bliffle

    At best, you have a very weak sovereignty over your home (as any victim of the recently devised mortgage crisis will attest), but you have some small say, even if you must fight for it constantly.

    On the other hand, under the New World Globalization Order terms will be dictated to you from, say, Brussels. Or perhaps Peiking. If you seek recourse you will have to journey there and sit on their doorstep with a petition for 10 or 20 years hoping for an audience with the New Pope of Global Commerce and Financial Purity. No doubt your petition will be rejected because of your various crimes against the new Global State and your generally low character.

    I, on the other hand, have a better plan: being dead by that time. By careful selection of parentage I have assured that I will live long enough to have tried almost everything I ever wanted to try, and not so long as to become a gibbering idiot dependent on my children.

    Ta ta.

    And once again:

    Good luck, sucker.

  • pablo

    #7 Clavy

    Of course I am not surprised you are a globalist clavy, as well as a peasant elitist. It is more people such as you that are the problem in this world globalist fascism that is sweeping the globe, as you are indeed one of their minions, not to mention your murderous activities in Vietnam decades ago, when you actively participated in killing human beings and burning them alive with napalm, you should be ashamed of yourself, however you have lost your own humanity, and are lost. I pity you, more than dislike you.

  • Clavos

    On the other hand, under the New World Globalization Order terms will be dictated to you from, say, Brussels. Or perhaps Peiking.

    I see no difference between any far flung city and Washington. It’s more likely to be Peking than Brussels. In another 20 or 30 years, the Chinese will own the world, if they are able to sustain their present rate of growth.

  • Clavos

    Aawww, pablito, you’re such a silver-tongued devil.

    you should be ashamed of yourself

    I know, I know. But, like most murderers, I’m not.

  • pablo

    I know Clavito, cuz you lost your conscience long ago buddy,

  • Clavos

    I don’t think I ever had one, pablito, they tend to be inconvenient and get in the way.

  • pablo

    Well at least your honest about it Clavy, I will give you that much.

  • Mark Eden

    Perhaps one of the comments censors will take the time to explain how Pablo’s #15 above is not a personal attack and why it has been left up for as long as it has.

  • http://www.republicofdave.com Dave Nalle

    Gary CFR Hart, one of their chief minions, and one of the creators of the first USA Patriot Act along with former US Senator Warren CFR Rudman,

    Quite an accompishment when he left the Senate 15 years before it passed.

    openly proclaimed within a week of 9/11 that this would be a perfect time to bring in what former President George W Bush called the “New World Order”.

    What Pablo will likely never grasp despite its obviousness is that what Gary Hart and George Bush and the CFR mean when they say ‘new world order’ and what Pablo’s controllers at the JBS have trained him to think they mean by it are two very different things.

    Dave

  • pablo

    Mark 21

    If you would care to look over the past 6 months at some of the comments that Clavos has directed at me, perhaps you would be a little more restrained in your haste to have me edited.

  • pablo

    Nalle post 22

    Hart and Rudman originators of the USA Patriot Act

    Sigh, I know I have to do all your political research for you Davey. You are quite right however in that Hart was no longer a sitting US Senator when he first tried to create this monstrous fascist piece of legislation, but Hart and Rudman were the creators of it.

    In regards to Bush, Hitler, Hart, Rockefeller and others of their ilk using the term “The New World Order”, you draw your own conclusions about it as I do, and I maintain that this terminology means one and the same thing, and brought to us by the Rothschilds family, in conjunction with Jacob Shiff, Koehn and Loeb, and JP Morgan.

    As I also pointed out The New World Order is now openly being taught in textbooks in our public school system. Nothing like the blind who refuse to see, oh that’s right your not capable of it, cause your blind! smirk for davey

    You might have saved yourself a bit of embarrassment had you just googled Hart and USA Patriot act buddy, however Nalle doesn’t get embarrassed does he?

    My political acumen buddy leaves yours in the dust, any day o the week pal.

  • pablo

    I would also like to point out the George W Bush when he originally used the phrase The New World Order was on September 11 1991, exactly ten years to the day before 9/11.

    Coincidental? Yes as coincidental as the Bin Laden family doing business for over 20 years with the Bush family, as well as being part owners of The Carlyle Group. I tell ya Davey, some people (YOU) will believe anything in your denial of the obvious.

  • http://www.republicofdave.com Dave Nalle

    Pablo, rather than writing “the Rothschilds family, in conjunction with Jacob Shiff, Koehn and Loeb, and JP Morgan” why don’t you just be honest with us and say what you’re thinking. It’s much easier to just write “evil jewish banking conspiracy” and much more honest.

    BTW,when I google Gary Hart and the Patriot Act, what I get are articles from Hart on HuffPo most of which seem to oppose the Patriot Act, and then way down the list some crazy conspiracy bullshit with some really bizarre misinterpretation of a Hart quote where he clearly opposes the idea of Bush’s NWO.

    As far as I can tell, you and Hart are pretty much on the same page when it comes to opposing the PATRIOT Act, Bush and the NWO, so your objection to him is mystifying.

    Dave

  • pablo

    Nice try with the anti-semitism smear Nalle, but the fact is I could care less about ones ethnic or religious background, and if you did your homework a little more you would know that I was referring to the Illuminati which was founded by one Adam Weishaupt who hardly was a jew, but in fact a Jesuit. Jacob Schiff as you probably are not aware, due to your ignorance on such things, lived at the same house as Lord Rostchild, and was in fact paid by him to come to the US for the Rotschild’s family businesses. That also is a historical fact buddy.

    For those of you that think that the Illuminati was a myth, perhaps you should tell that to the late great George Washington who referred to them on numerous occasions.

    In the same way that current Zionists use the anti-semitism label to smear anyone who questions the policies of Israel, you yourself are using it to try and smear me with that label, just as you did before by labeling me a nazi.

    As I have said on numerous occasions Nalle smear is your weapon of choice when trying to rebut someones argument, as logic, a knowledge of history, civility, and honesty are lost on you.

    I know you can’t help yourself Nalle in your attempt at smearing people such as myself of good character, and un-bigoted, but hey nobody is perfect fella.

  • pablo

    JP Morgan was jewish Nalle? Oh really? Another attempt at re-writing history pal? Nice try

  • http://drdreadful.blogspot.com Dr Dreadful

    Mark @ #21:

    Pablo stepped close to the line, but in my view he did not cross it.

    It’s a fact that Clavos did fight in Vietnam, and I feel that Pablo’s comments on the subject in #15, obnoxious though they be, are his personal opinion. They are no more nor less objectionable than the insults (and worse) hurled at returning GIs by anti-war protesters in the late 60s and early 70s.

  • Mark Eden

    Interesting take on the comment. I didn’t realize that the hallmark of a personal attack is that it is based on falsehood.

  • bliffle

    Clavos makes an obvious poor judgement:

    “I see no difference between any far flung city and Washington.”

    Really?

  • pablo

    Mark 20

    And which falsehood are you referring to Mark. Pray tell me.

  • Clavos

    I would also like to point out the George W Bush when he originally used the phrase The New World Order was on September 11 1991, exactly ten years to the day before 9/11.

    Be afraid…be very afraid.

  • Mark Eden

    Try to keep up, Pablo.

  • pablo

    Nice evasive answer Mark. :)

  • pablo

    post33

    Be aware, be very aware, as the sheople are fast asleep.

  • http://www.maskedmoviesnobs.com El Bicho

    former President George W Bush called the “New World Order”.

    considering the confusion after Jan 20, 2009 by future Internet users, let me point out that it was George H W Bush’s phrase in one of my favorite Ministry songs

  • Mark Eden

    pablo, I evaded nothing. You need to learn to read.

  • pablo

    You just cant seem to stop with the insults Mark, I will be happy to return the favors on a continual basis, you must be a student of the Dave Nalle school of civility.

  • Mark Eden

    pablo, if you get around to comprehending #30, let me know…or better, don’t bother. As for your going into stalker mode, do what ya gotta do, ace.

  • pablo

    Mark,

    I cannot comprehend post 30, and am bothering. This is the second time that I have asked both times politely I might add, contrary to your replies concerning post 30. Please sir elucidate for me, I want to be as informed as you are.

  • Mark Eden

    Fine pablo. Let’s start with what you think it means.

  • pablo

    Allow me to clarify exactly what I meant in post 15 directed at Clavos. I feel that anyone who participated in that undeclared war of aggression was guilty of war crimes. The reason is quite simple actually, as the US Constitution specifically gives only the Congress the power to declare war, as in an ACT of Congress as opposed to a resolution such as the AUMF (Authorization to Use Military Force, or in this case The Gulf of Tonkin Resolution), these were not Acts of Congress, and thus any soldier that participated in it, is guilty of breaking their oath to uphhold the Constitution, and are all collectively guilty of murder, torture, and genocide. Clavos may not have dropped the napalm himself, or even shot a soldier defending her/his country, but by violating his oath to uphold the constitution he is guilty of the crimes above, I of course mean rhetorically as he has not been convicted of anything………yet. Far as I know there is no statute of limitation on murder.

    The fact that he or many of his peers were only 18 has little bearing on it. He was an adult in the eyes of the law, and swore an oath.

    I hope this explains a bit further what I meant in the post in question Mark.

  • pablo

    Geez Mark, you didn’t happen to serve in Vietnam or Iraq did ya buddy? For some reason I am getting the distinct feeling that you did. If you did, perhaps your maker will forgive you, I cannot speak for her however, good luck!

  • Mark Eden

    Far worse pablo. I’ve paid my taxes all along and enabled the mess.

  • pablo

    Figures

  • pablo

    I am still however waiting patiently, for you to tell me what was untrue regarding my remarks to Clavos that you wanted edited, particularly since I have attempted to clarify them. I suspect however that you will choose not to, as your argument will not be up to snuff.

    Murder is murder, dropping burning gasoline jelly on live human beings is still torture, and participating in such activity is evil.

  • pablo

    And YOU wanted to be the omnbudsman lol, thanks for making point Mark. hehehehe

  • Mark Eden

    The idiocy of this conversation grows too thick. Quote, if you believe that you can, my comment where I wrote that anything that you wrote in your remark to Clavos was untrue.

  • pablo

    Sure Mark Old buddy

    That was in your followup comment in post 30. Last time I checked falsehood equals untrue.

  • Mark Eden

    Read the fucking comment. Some might call your misrepresentation of my comment as foolishness and others a lie. I think that I’ll go with both and refer to you in the future as ‘pablo, fool and liar’.

  • pablo

    My we are hostile today Mark, not gettin any buddy?

  • Clavos

    My we are hostile today Mark, not gettin any buddy?

    Nope, just another of the millions of your admirers pancho.

  • pablo

    awww Clavy, how sweet of you.

  • http://www.fontcraft.com/rod/ Dave Nalle

    You just cant seem to stop with the insults Mark, I will be happy to return the favors on a continual basis, you must be a student of the Dave Nalle school of civility.

    Pablo, perhaps you ought to consider that when a bunch of very different people who represent just about every political persuasion and are generally pretty civil to each other, react negatively to you, they aren’t the ones who have the problem.

    Dave

  • pablo

    Well Dave old buddy,

    Since unlike you I criticize vigorously both the left and the right side of the political spectrum it comes as no surprise buddy.

    As I have said numerous times I never strike the first punch, with perhaps the exception of Baronius which I have apologized for. You are more than welcome to perouse the archives good buddy and show me one instance where I did. I just dont happen to take any shit, and once served my way have to problem returning the favor, particularly in your case Nalle.

  • Mark Eden

    Utter tripe as are most of your comments. Google ‘remedial reading programs'; you’ll find what you need there. When you complete one of the many courses offered you should go back and reread the texts that you claim to have learned your history from. Chances are that you’ll find that your poor reading comprehension has led you astray.

    Mark

  • http://www.fontcraft.com/rod/ Dave Nalle

    Pablo: I just dont happen to take any shit admit the existence of any facts outside of my narrow worldview, and once served my way have to problem returning the favor, particularly in your case Nalle.

    There, I think that puts it closer to what you meant, Pablo.

    Dave

  • Mark Eden

    It is ironic that intellectual dishonesty not unlike that which pablo exhibits here (and documents for the future) is what played a major part in the lead-ups to the wars that he decries. Won’t he be shocked when he finds out that the willfully dishonest burn first.

    Mark

  • http://www.fontcraft.com/rod/ Dave Nalle

    When it comes to opposing wars I find people like Pablo who oppose wars for the wrong reasons and at the wrong time to be more troubling than those who support them for the wrong reasons. At least those who supported the initial phases of Iraq have the excuse of being ‘tricked’ — what excuse do folks like Pablo have for opposing the war at the point where the damage has already been done and all that remains is reaping the benefits of a successful resolution? When we have the opportunity to get out at a reasonable pace and take a couple of bows, he’d rather go pointing the finger and wallowing in blame. Self destructive behavior which is compounded by his particular desire to pursue blame for irrelevant fantasy issues like 9/11 conspiracies.

    Dave

  • pablo

    “When it comes to opposing wars I find people like Pablo who oppose wars for the wrong reasons and at the wrong time to be more troubling than those who support them for the wrong reasons”

    And pray tell Nalle what would those reasons be? Since your are so presumptive, I am all ears, particularly when they have been judged to be the wrong reasons by the esteemed politico Dave Nalle, hehehe.

    For those of you that were “tricked” into supportin an undeclared war of aggression in Iraq, I an only say that was pretty damned dumb!

    As for 9/11 Davey only someone brain dead would believe the government’s lie about that tragic day, including the CFR commission appointed by Bushie, you know the one where Bush and Cheney had to testify together, hehehehe. Sure Davey, whatever u say buddy.