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Feral Finster's avatar

I am not a Marxist, but a man named "Marx" had something to say about monopoly capitalism, and a man named "Lenin" also sometimes wrote about finance capitalism in particular.

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Treeamigo's avatar

Interesting, thanks.

Let’s remember that among the large banks the Fed has Citi and Wells in the penalty box and Goldman politically cannot be offered any special opportunities. This leaves BoA and JPMC who were both advantaged over large regional bank buyers for FRC as they have branches in the same places FRC does, allowing for cost cuts and economies of scale. BoA was not interested in FRC, leaving JPMC.

JPM’s current pre-eminence is a matter of happenstance and good fortune. JPMC had purchased Bank One in 2003 and was in consolidation mode, actively trying to reduce its balance sheet in 2004 and 2005 when other banks were starting to build their balance sheets aggressively as the real estate and credit bubble kicked off.

By 2007-2008 JPM was ready to grow again and Dimon made a bid for Wamu in early 2008 (pre-failure). Wamu’s board rejected the bid. If Dimon had been successful JPM would have been hurt like Wachovia and BoA who foolishly bought bad assets before the crash and Dimon would have been sacked within a year like their CEOs.

Better to be lucky than smart.

Even so, all the big banks have recovered from their self-inflicted harm of 2008-2009, even BoA and Citi. JPMC started with a better balance sheet and no doubt is a well-run bank (I was an MD there for nearly a decade pre-GFC and still have friends there) with excellent franchises but it has been a relatively easy last 10-13 years for all the big banks. The prior 15 years 1995–2009 had several huge EM crises, the TMT collapse, Enron, dot com collapse and the GFC. Lots of sailors look like geniuses with calm seas and favorable winds.

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