Bank of America’s Acquisition History

Barry Riholtz samples a graph from the Wall Street Journal illustrating the history of Bank of America’s acquisitions since 1990 and how it came to be such a ponderous, failing giant.

From my perspective that history goes back a bit farther. More than 50 years ago I opened a passbook savings account and a checking account at Clayton Bank in Clayton, Missouri. My dad was the bank’s attorney and continued in that role until his death. Its top managers were frequent guests in our home and our entire family were on first name bases with them. Clayton Bank issued me an American Express Gold Card in 1976. I closed the savings account somewhat sadly several years ago but the checking account is still my primary personal checking account.

In the 1980s Clayton Bank was acquired by Boatmen’s Bank which was on a tear of bank acquisitions in Missouri at the time which lead to it becoming Missouri’s largest bank. A high school friend of mine was the son of one of the bank’s officers who, as it turned out, had gone to law school with my dad. They, too, were frequent guests in our home and we were on a first name basis.

Boatmen’s Bank was acquired by NationsBank in 1996, one of the acquisitions that lead to NationsBank, which had a substantial history of acquisitions of its own, becoming the South’s largest bank.

In 1998 Bank of America acquired NationsBank.

My wife had been doing her banking at LaSalle Bank. Bank of America’s acquisition of LaSalle in 2006 meant that for the first time in our married life we were doing our banking at the same bank.

It’s not clear to me who is being served by all of these acquisitions. Clearly, it is not the banks’ customers. Each acquisition has been an inconvenience and although most of these marriages are years in the past I still occasionally encounter some issues because my checking account was opened in Missouri, IMO bizarre for a bank with a national presence.

It’s not the banks’ shareholders. A quick check of share prices will confirm that for you. That these megabanks are, rather obviously, unmanageable suggests to me that the banks have not benefited organizationally by the acquisitions. I suspect that any possible increasing returns to scale were realized many acquisitions ago.

I can only discern one group that has obviously benefited: top management of a bank with total assets of $500 billion can garner higher compensation than top management of a bank with assets of $50 billion who can garner high compensation than top management of a bank with assets of $1 billion.

I’m sure my pals at the old Clayton Bank are long dead but I know for a fact that their income wasn’t measured in millions (or the equivalent 40 or 50 years ago).

40 comments… add one
  • But but but…economies of scale!!! Bigger is better. Gonna call you on this one Dave, even you have made this argument.

    Personally, I don’t buy it, but there it is.

    I think financial institutions got big not due to economies of scale, but because it was good from a public choice/rent seeking view point. That being big makes it much, much easier to get a bail out than when you are a small to mid sized bank.

    And if anyone says, “Oh but isn’t the public choice/rent seeking aspect kind of like economies of scale?” No. Economies of scale is a concept that relates to efficiency and cost savings. Being able to secure a bail out on the other hand has absolutely nothing to do with efficiency and has everything to do with mitigating one’s losses at taxpayers expense.

    That our political class happily goes along with this (because a good many of them will find some sort of employment in that sector later on) makes them venal and despicable.

  • sam Link

    “I think financial institutions got big not due to economies of scale, but because it was good from a public choice/rent seeking view point.”

    It might be simpler than that, Steve. The bigger the bank, the bigger the salaries at the upper echelon…

  • Icepick Link

    Don’t forget all the additional folks that benefit from the M&A activity – mainly companies and people whose jobs are related to doing M&A work. And the boards of directors must be making a bigger nut too, or they wouldn’t approve this stuff.

    And here we get to the rather pernicious aspects of the bailouts starting in 2008 – these massive institutions have become even more massive. This with the approval of Administrations of both parties, and largely with the approval of both parties in Congress. Because the obvious solution to the TBTF Problem is to make the institutions in question even bigger.

  • Drew Link

    Lots of cynicism going around today…..Reynolds Disease.

    My experience with BOA predates 1990 as well. I was at Continental doing LBO loans when it was purchased in 1993/1994 – I forget the exact date. (and by the way, on a topic I get scoffed at all the time. Getting bigger as Euro or Asian banks got bigger was the game. If you didn’t play the game with CRA that was the threat the regulators made: no acquisition approval. Of course I now know this never happened. I was in a hallucinogenic stupor, and my eyes and ears lied to me, much like George Stephanopolous’s diary lied to him.)

    But I digress. There is no doubt that BOA was a lousy purchaser, arrogant, and fundamentally a retail bank. Continental was a business bank. (and there can be little doubt that is why BoA eventually had to buy LaSalle – the retail footprint.). But I digress again.

    The stated theory was that funding scale economies and regional loan and income stream diversification issues drove the consolidation. My personal experience suggests this is true, based upon first hand discussion. Could it have been rent seeking or sr exec salary seeking? Perhaps. But remember the line in the Godfather movie when Barzinnis guy was having dinner with Michael and he said “you give me too much credit, kid.”. Same thing. You give them too much credit, or impugn too many nasty motives.

    As for stock prices, I’ll go check, but my knee jerk reaction is that current pricing (which reflects the long term return) is more a creature of housing than acquisition economics.

  • Drew Link

    Uh, impute.

  • PD Shaw Link

    My office is in a bank building and we had to stop identifying the bank on letterhead/business cards because the changes became too frequent. On this site there one of the three big banks in the city existed for over a hundred years, and then it was acquired by First of America in the 90s, which was acquired by National City, which was acquired by PNC (with a government assist).

    Its worth pointing out that when banks fail they are sold to other banks. Under any body’s policy preferences, it would seem fewer, larger banks would result.

  • Andy Link

    It’s not clear to me who is being served by all of these acquisitions. Clearly, it is not the banks’ customers.

    Then why are you still banking with them?

  • Icepick Link

    Drew, if what you say is true, that they didn’t consolidate to rent seek, then why did the banks all get BIGGER after collosal failuers costing trillions – of the government’s money? The government HELPED them consolidate, as well. Wachovia to Wells Fargo, Countrywide to BofA, numerous little fishes being bought up by fewer bigger fishes, etc.

    As for funding scale economies – how the Hell did all the big industril concerns in the past (you know, the ones that used to matter in America) get anything done without these wonderful funding scale economies?

    Further, is it necessary that the bank that handles a 40 billion dollar merger deal also must handle the checking accounts of millions of people whose accounts are worth a few hundred dollars at most? What the hell are the investment banks FOR if they can’t scale BIG at times? (Not that investment banks exist anymore – thank you TARP.)

  • Steve V.:

    Gonna call you on this one Dave, even you have made this argument.

    I’m surprised. Since I believe that bigness per se is problematic, my typical argument is in favor of limiting the size of institutions rather than an argument in favor of larger ones. I can never remember having argued in favor of larger banks but I can remember arguing that we should never have legalized branch banking.

    Drew:

    Getting bigger as Euro or Asian banks got bigger was the game.

    I recognize that was the pretext. As I said above my preference is for smallness, particularly in banks, and I think we would have been better off prohibiting large European and Asian banks from operating in the U. S. than increasing our banks hypothetically to enable them compete. Several of the five largest banks in the world today are Chinese. There is no prospect whatever that any American bank will be able to be as big as the state-owned Chinese banks (notorious for their opacity).

    The stated theory was that funding scale economies and regional loan and income stream diversification issues drove the consolidation.

    I’d certainly like to see the numbers on the economies of scale that were obtained by the acquisition of LaSalle. Service reductions are not economies of scale, I think that most of what’s generally realized are in fact service reductions, but they are sold as economies of scale.

    Andy:

    Then why are you still banking with them?

    Basically, inertia. We’re considering moving our banking to a small local bank.

  • michael reynolds Link

    Should have let Romney at it. He would have pocketed the cash, declared bankruptcy and sent all the workers to the unemployment office.

    Oh, darn, is that my cynicism again?

  • Ben Wolf Link

    Too much of the nation’s financial infrastructure being controlled by a handful of banks was a major contributor to the severity of the financial crisis. We should have capped each bank at $100 billion in assets and been done with it, instead of passing the regulatory mess of Dodd-Frank. The additional complexity will only make the next crisis worse.

  • Drew Link

    Oh, darn, is that my cynicism again?

    No, thats just flat damned stupid and kindergarten level commentary.

  • PD Shaw Link

    Dave certainly has argued against legalizing branch banking, because I can also recall pointing out that one of the contributors to the S&L crisis is believed to have been the lack of diversification in loan portfolios, particularly in Texas. The states and the federal government relaxed interstate banking prohibitions in the early 90s as a result. I don’t think I convinced Dave at all, but I’m still not convinced that the branch banking restrictions were not simply local protectionism for influential local actors, a difference in degree and not kind for favorable treatment for influential natinal actors.

  • Drew Link

    Re: pretext and.., particularly in banks, and I think we would have been better off prohibiting large European and Asian banks from operating in the U. S. than increasing our banks hypothetically to enable them compete.

    Well, you are talking raw protectionism, and the merits thereof vs systemic risk. That’s probably a worthwhile debate. But if you believe, as I do, that the systemic risk was born primarily of govt driven policy, then you are barking up the wrong tree.

    As for scale economies and service, those are two different subjects. A bank P&L has two basic cost inputs: money and people. The benefit of scale on money is obvious. As for service, I don’t run a bank. But I do know that in other consumer environments every last damned survey will tell you that people will pay for service………except in reality they shop on line or research on the guy who finances bricks and mortar…..and then buy on line. They test out the great new golf clubs with the guy who has inventory and a launch monitor……..then buy at a discount house. In summary: think Wal-Mart.

    Everyone says they will pay for service. 10% best case will. You might, Dave. But 90% only give it lip service. If a manager / owner does not heed this warning or recognize this reality……..he/she’s dead. Market realities are cruel, and focus the mind.

    Idle musings about utopia are for liberals. You know, no sense of reality.

  • Ben Wolf Link

    “But if you believe, as I do, that the systemic risk was born primarily of govt driven policy, then you are barking up the wrong tree.”

    The systemic risk was primarily from over-leveraging. While capital requirements limit how much risk banks can take with conventional loans, the unregulated OTC derivatives market allowed banks to circumvent those requirements and, in some cases, reduce their capital ratios to 1%. If a single medium sized or small bank did this and went bust it wouldn’t have had much of an impact, but we had over 60% of our banking system vastly overleveraged in this way. Their vast liabilities and large size meant a major financial crash was inevitable.

    There were very simple, transparent rules which could have been put into place to stop it or prevent it from happening again, but that ain’t how we roll in the U.S. Much better to make things exceedingly complex so the Fed and White House can cover for their banker buddies next time they screw the pooch.

  • PD Shaw Link

    So, Drew, you were with Continental Illinois? The bank for whom the phrase “too big to fail” was largely invented?

  • Drew Link

    PD –

    Yes, but long after Penn Sq.

    Ben –

    Re: derivatives

    Of course. But if you were a bank exec, how would you have managed your balance sheet?

  • Ben Wolf Link

    @Drew

    I’d probably have done the same damned thing. I’m not ashamed to admit I would be just as tempted as anyone else given the enormity of the profits to be had from it. And if I had been the one bank exec to limit derivatives exposure I’d have probably been crucified by the shareholders and employees when the other banks were all-in and paying out a fortune.

  • Drew Link

    Ben –

    I think you miss my point. Those lenders, especially the early and controlled lenders, we’re forced to make crappy loans. They knew they were crap. Only a fool wouldn’t try to offload them. Thats what all the lobbying for the GSEs to buy them was about.

    The process was many years old when the crooks like Countrywide entered the scene.

  • Ben Wolf Link

    @Drew

    No, we’re talking about the same thing. If I can off-load low quality loans into the derivatives market I can in theory push my exposure onto someone else AND increase profitability at the same time. That doesn’t even involve the liar loans and stiffing of clients conducted over the last decade once the big boys realized they could manipulate a rigged game.

  • Steve Link

    Query- Claims are made that money, on-the-job form of taxes, will alter behavior. Yet, when it is clearly demonstrated that making banks bigger resulted in larger salaries, money could not possibly have been the incentive. Instead, we get people citing the CRAZY, for which there is about zero evidence as a cause for increasing g bank size. Is money an incentive or not? When should were accept hearsay over data?

    Steve

  • Drew Link

    Ben –

    Perhaps you look at motive and syndication practices differently than I. For example, continental was an origination and underwriting bank who kept – to facilitate its syndication efforts – a considerable portion of it s loans on its balance sheet as nicely yielding assets. Otherwise the stuffee banks would not buy.

    That’s a far cry from your scenario of syndication as standard and dominating practice, and certainly from raw origination and syndication of crap loans.

  • Dave,

    I seem to recall at OTB that you argued that banks here had to get big…to compete. Maybe I implicitly assumed you were making an economies of scale argument. If that is incorrect, maybe a quite comment on why you thought that.

    Michael,

    Oh, darn, is that my cynicism again?

    Sometimes you have to let workers go. Sometimes even all of them. If a firm is badly run then if you can you fix it and salvage what you can. If you can’t you liquidate the assets and people move on. Yes it sucks, but that is part of the dynamic we call the market place and by and large it has done a pretty good job at improving peoples lives. It isn’t perfect, but to argue that we can keep badly run firms in place is just…wait that is what both Bush and Obama are doing…never mind.

  • PD Shaw Link

    steve, the banks were largely prevented from expanding until the early 90s by state and federal regulations that tried to keep banks local. There were work-arounds to avoid this that by most appearances were inefficient and costly. They also insulated a number of parochial banks from competition. Lifting these restrictions I believe is the proximate cause of the merger mania.

    The reason the banks did acuqisistions was to make money, so sure the incentive is monetary. If you and Dave are implying the CEOs committed fraud on their shareholders; I’ve only read one credible account of this and that was Ken Lewis under pressure from the feds to close on Merrill Lynch. Generally, what I see are compensation agreements that are tied to stock and stock options, which align their interests for a period of time.

  • Drew Link

    Steve

    You really need to think more like a businessman before a post like that.

    When someone considers business expansion, be it a new factory, sales force addition, warehouse, R&D investment etc one simply looks at strategic and competitive implications and then risk adjusted return. And it’s simply a discounted cash flow concept. An element in discounted cash flow is taxes. Simple as that. More taxes, less discounted cash flow. The concept shouldn’t be controversial.

    But you mix concepts. Note that I said there were strategic and competitive considerations as well. And in fact in my experience they are the primary considerations. So you posit a simple arithmetic concept as the driving decisionmaking force when business managers actually are charged with stewarding assets with strategic and tactical considerations in mind. I have to tell you, I was not at the Sr or Board level when at the bank, but I was part y to some very high level deliberations. And now, of course, I’m at the highest level. And no one I know makes decisions on salary maximization.

    Provacatuer old Drew would have said “simple minded” in response to your assertions. Actually, the better description seems to be “simplistic” and probably “unwarrantedly cynical.”.

    You and Michael need to go have a scotch and cigar and shoot arrows at the business world. T he rest of us will do something productive.

  • michael reynolds Link

    Sometimes you have to let workers go. Sometimes even all of them. If a firm is badly run then if you can you fix it and salvage what you can. If you can’t you liquidate the assets and people move on. Yes it sucks, but that is part of the dynamic we call the market place and by and large it has done a pretty good job at improving peoples lives.

    I agree. I’ve fired a dozen or so people in my life — more if you’re one of those who think agents are people.

    But I’ve never looked at a business and thought, You know what I could do? I could strip out all that’s most profitable from that company, push it into bankruptcy and throw 1000 people out of work so they’d lose their health insurance and lose their homes and lose their pensions and have to pull their kids out of school. And why? So that I can go from having 100 million to 150 million.

    People who do that for a living are scumbags. Part of the market system? Maybe. Slavery used to be part of the system. Pushing Camels on kids used to be part of the system. The market encompasses ineffective medicines, and payday loans, and dishonest contracts. A thing can be legal and yet be contemptible.

    If Mitt Romney had not systematically destroyed people’s lives for profit, would someone else have done it? No doubt. And I would have the same lack of respect for them.

    There are people who strive and build and create, and then there are people who gouge, and screw and ruin. I have the greatest respect for the first group. You choose what you do within the free market system, and you bear the moral burden of your choice. And “Someone else would do it if I didn’t,” has never been an excuse that you or I would accept from our kids, let alone from someone aiming to be the president of the United States.

  • Drew Link

    But I’ve never looked at a business and thought, You know what I could do? I could strip out all that’s most profitable from that company, push it into bankruptcy and throw 1000 people out of work so they’d lose their health insurance and lose their homes and lose their pensions and have to pull their kids out of school. And why? So that I can go from having 100 million to 150 million.

    And neither do 9999 out of 10000 businessmen. And so did not Mitt Romney. If that’s what you really believe, I have to alter my admonition to steve. You are simple minded, not just being simplistic.

  • Ben Wolf Link

    @Drew

    I’m not saying syndication of low quality loans was standard, at least not at first. The timeline on the derivates trade was a slow increase and then a sudden explosion once MBS was perfected and disseminated throughout the financial system. I’m sure you remember how it suddenly went from a niche product to a dominant force in the OTC market. Demand became so great banks almost HAD to churn the stuff out en masse.

  • michael reynolds Link

    Drew:

    You confuse your own self-interest with virtue. It helps to think of yourself as a good man, and you think of yourself as a businessman, so you extend that to all the rest of your class. You generalize. If I am a businessman and a good person it follows that all businessmen are good people.

    But that’s basically tribalism. I am a Gaul, I am good, therefore all Gauls are good. In my case I might think I am a writer, I’m a good guy, therefore all writers are good guys.

    It’s just nonsense. Do you think Tyson makes their plants as safe as they can be? Or do you think they cut as close to poisoning people as they think they can get away with? Do you think cell phone companies add on un-requested services so as to rip off customers? Do you think banks go to great lengths to sneak extra charges onto their customer’s statements? What of Verizon actually trying to charge customers for paying their bills? What of airlines changing the terms of mileage plans and ripping off customers? What of supermarket chains changing the sell-by dates on meat? Car dealers rolling back odometers? Double-booked hotel rooms. Bullshit maintenance contracts? Retailers with coupons that are designed to be useless? Hidden fees, deliberately undecipherable contracts, TOS routinely ignored, data mishandled? The examples are endless. Hundreds. Thousands of them.

    You have a child’s view of the world, Drew: My team = Good. And you go the next step by imagining a devil: government. And you actually think you’re a sophisticated man. But it’s just tribalism. I’m good therefore all like me are good. All who are not like me are suspect.

    Actually, Drew, the odds of a businessman being decent, honorable and upstanding are no better than the odds of teachers, union members, cops, priests, artists, government employees or anyone else.

  • steve Link

    @PD- I think liar’s loans were fraud, but realize I take a minority position in that belief. To your larger point, I am not implying that bank management was committing fraud. I think they saw opportunities to make their business grow. I think they also realized that they would make a lot more money if the businesses got bigger. I dont see anything nefarious or simplistic in making this claim. It is pretty basic economics. People act in their own self interest. What I find odd is the denial of this most basic of economic principles.

    Why would people want to deny this influence? Is there some evidence that bankers are paragons of altruism?

    “When someone considers business expansion, be it a new factory, sales force addition, warehouse, R&D investment etc one simply looks at strategic and competitive implications and then risk adjusted return. And it’s simply a discounted cash flow concept.”

    Yes, I get that. We are expanding pretty quickly (for us). The part you leave out here is compensation for management. You either ignore or dont believe that management is influenced by their own, personal incentives. Compensation in the financial sector for management has become quite large, as you have to know if you read the business section in any paper. I think that outsized compensation is a major factor in those decisions, and sometimes is put on par with your factors. In places like Enron, Worldcom, etc. they become the dominant factor.

    Steve

  • steve Link

    @Ben- This on the shadow banking system, derivatives and repo might be of interest.

    http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2010_fall_bpea_papers/2010fall_gorton.pdf

    Steve

  • sam Link

    I was pawing around in my wallet yesterday for something, and I came across the subject of Dave’s post in a (kind of) microcosm. I keep those tyvek slipins that banks give you for your debit card and found these:

    Baybank (—>)BankBoston(—>)Fleet(—>)Bank of America

    BankBoston was a bank based in Boston, Massachusetts, which was created by the 1996 merger of Bank of Boston and BayBank. Bank of Boston had a venerable history dating back to 1784, but the merged BankBoston was short-lived, being acquired by Fleet Bank in 1999. In 2005, FleetBoston was purchased by, and merged into, Bank of America of Charlotte, North Carolina. [a href=”http://en.wikipedia.org/wiki/BankBoston “>Source

    Reading that source can make your head swim.

  • PD Shaw Link

    steve, I guess I disagree with the notion that executive compensation is the single most important contributor to bank consolidation; it may not even be in the top five.

    I guess the question would pose is in an environment in which there were no state and federal regulations intended to minimize the size or territorial reach of banks, over time, how many banks would there be?

    I think the answer is far fewer and much larger. As Drew alluded to earlier, banking is cost sensitive, people won’t pay for different levels of service, so its one level of service. People also don’t tend to shop. Dave doesn’t appear to be changing when the name on the door changes (I don’t either). For most of the regular personal banking, and even most business banking, the services banks provide are quite fungible. That means by acquiring a bank, I acquire more customers in a way that I can’t through advertising or product innovation. I wonder why are there so many banks?

  • PD, let me make a more subtle statement of what I actually think is the case. I think that banks have believed that they need to grow in order to compete with other large banks and with foreign competitors. Banks have claimed that economies of scale can be realized on such growth. I’m skeptical. I think that non-scale changes in operation are actually accomplishing whatever economies there are and that the vulnerability of domestic (retail banks in particular) to foreign competition has been overstated. Becoming too big to fail is a secondary effect but an important one.

    High compensation for top management is the icing on the cake. I think the analogy is a good one: it makes growth look and taste better than it actually is.

    I’d like to see the numbers. For example, I’m skeptical that acquiring LaSalle resulted in economies of scale for BoA and I reject the idea that some of its later acquisitions resulted in economies of scale. Countrywide?

    I strongly suspect that customers, stockholders, and the banks themselves would be better served by more, smaller banks.

    Additionally, I believe that smaller institutions—and in that classification I include not only banks but companies, governments, labor unions, and even non-profits—are more supportive of freedom and less likely to hurt you than big ones. My preferred methods for keeping institutions small are removing the various subsidies that encourage bigness (subsidies on bigness take a variety of forms) and restricting interstate operations.

    I recognize that accomplishing that may require some protectionism and other, economic activity-reducing activities. I think that exchanging a little more freedom for a little less economic activity is a good trade but I recognize that I’m in a minority in that view.

  • PD Shaw Link

    Dave, I’ve placed the word “Jeffersonian” next to your name in my head on this issue; its not a view I share, but I’m glad you recognize that your small bank preferences may have economic reducing consequences.

    I am inclined to be more concerned that localization/ regionalization restrictions will mean poorer access to capital outside of major metros, and that state government support of pet banks can be just as problematic.

    I think the banks are important to the economy in a way that other businesses are not, so not only do I support bailing them out, I do support regulating them to avoid bailouts. The old intrastate and interstate branch banking restrictions just don’t make much sense to me. Greater division between commercial and investment banking makes sense to me. Mandatory clawbacks for some forms of compensation make sense to me too.

    But I think we may be looking at the wrong end of the stick. The economic downturn was going to create fewer, larger banks. The FDIC’s modus operandi for bank failure is a subsidized M&A to a similarly sized, if not larger bank. What are the restraints on start-ups in the area? (Besides a sucky economy)

  • steve Link

    @PD- Somehow, everyone thinks they, or those they champion, are immune to economic incentives. Most of the docs are work with deny that money influences their decisions. I disagree. I think it is a constant, but sometimes subtle influence. In the case of the banks, I would bet that for many of the mergers, increases in salaries for management was not the number one incentive, but I bet it was number two pretty often.

    As to the economy of scale argument, Simon Johnson has linked to numerous papers on the issue. There does not seem to be any advantage to banks the size we have now, other than that people are afraid to let them fail.

    @Dave- Break them up.

    Steve

  • PD Shaw Link

    Coincidentally, my local free weekly has a good article on community banks, including the concern that the number of new banks being formed is down (see first graph). Key quote from an interview with Amar Bhidé, a business professor at Tufts University:

    “We’re in worse shape now than we were before,” he says. “We passed a monstrously complicated piece of legislation that does very little to attack risks that even the big banks’ managers couldn’t get a handle on. At the same time, these complicated regulations suck up the man- and woman-power of regulatory agencies. What little they were able to do before, they’ll be less able to do now.”

    . . .

    “Community banks get the brunt of whatever regulatory excess there is,” he said. “I think Dodd-Frank will put many community banks out of business because small banks cannot support the fixed costs of coping with all the requirements. You’re going to see a lot of unwarranted mergers of small banks, simply because they can’t afford the legal and reporting infrastructure.”

    Don’t Blame Community Banks

  • I have an anecdote. Between jobs, I worked for a temp agency in Dallas in the ’80s. One of those took me to the Republic Bank building in Dallas. Republic had gone over to NCNB.

    I stood in for a secretary in the mortgage department who had gone on maternity leave.

    In the beginning, I worked for a charming black woman who had been selling mortgages for 17 years. In the interval that I worked there, they brought in a recent white grad with legs up to her eyes and a near Valley-girl accent.

    One of the first things she did was call all the women in the department to give an opinion on the new short green double-breasted suit that she had bought at Neiman’s.

    That is your Bank of America.

  • To be fair, it was a good-looking suit.

  • People who do that for a living are scumbags. Part of the market system? Maybe. Slavery used to be part of the system. Pushing Camels on kids used to be part of the system. The market encompasses ineffective medicines, and payday loans, and dishonest contracts. A thing can be legal and yet be contemptible.

    Sure there are ugly aspects of the market, just like everything in life. Are parents good? Most are, but there are those who are despicable and should probably be summarily shot.

    But even some of those things that look bad aren’t like payday loans in your list. Clearly getting a “loan” with at high interest rate is not ideal, but for many at certain times it is necessary. And consider that a bank would often charge these same people $50-$60 in fees and what not for a bounced check which when annualized often results in a considerably higher interest rate than you’d find with many payday lenders.

    Yeah sure, it would be ideal if people saved and had something to draw on in times of emergency or when there isn’t enough money, but life is often far from ideal. So what happens, go without? That is always and option but is that really better than paying the higher interest rate? And who are you to say it is okay for another family to go without? Shouldn’t we, I don’t know, let them make that decision?

    And yes, if a firm’s assets are worth more sold off than keeping that firm going then that is what you do. Shut down and liquidate. Does it mean people become unemployed? Yes it does, but that is part of the market, it isn’t nice but without it it wouldn’t work.

    As for tribalism, I think that many of the rotten aspects of businesses are not nearly as common as you make it out to be. Nothing is perfect in this world and there are many dubious businesses that use questionable and even illegal practices, but still business in this country provides far more good than harm.

    Oh, and as a last note, there is no such thing as a good cop…or if you are a truly good cop, you wont be one for long once you try to expose a bad cop. And look…a government agency.

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