Memo From "Banker Guy"
Now I'm pleased to introduce you to "Banker Guy," who runs an honest-to-God successful bank, who has opinions on what's going on in the financial crisis, but who also wishes to remain behind the veil. Here's Banker Guy's first offering:
When We Talk About "Banks" Just What Are We Talking About?
According to the FDIC there are nearly 8,300 banks in the United States. However, if you look at the Federal Reserve's report on consumer credit, you will note that banks provided at little more than a third of the total loans. A quarter of all consumer credit was provided by securitized pools, so-called "asset-backed" securities. If you look at mortgages on 1-4 family residences, once again you will see that banks provide less than 30% of such mortgages and that securitized pools represent over two thirds of all mortgages outstanding.
We have only reviewed two categories of debt, but you get the picture. If you consider commercial loans, then the nearly $2 trillion commercial paper market and public debt markets come into play and are outside of most all commercial and savings banks.
So who are the lenders besides the 8,300 "banks?" They are insurance companies, money market funds, brokerage houses, hedge funds, off-shore banks, and governmental funds. In addition these lenders are GE, GMAC (remember those Ditech commercials), pension plans, and federal, state, and local governments.
The political aspect of all of this is that it is a lot easier to harangue ten or twelve bank CEOs and pressure regulators to harangue the rest of us bankers than it is to deal with the reality of the marketplace of lenders.
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