Question about the banking industry..

Discussion in 'Political Discussion' started by DarrylS, Oct 4, 2008.

  1. DarrylS

    DarrylS Supporter Supporter

    Sep 13, 2004
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    +1,516 / 35 / -36

    economics is not my strong suit, but beginning questioning the amount of new banks being built.. where I live there are two new economic areas that have developed in the past 5 or so years.. in each one there are at least 5 new banks.. some of which I never heard of.. they are all pretty imposing on prime real estate ... looks like huge investments.. are these the benefit of the mortgage industry?? Or is banking that lucrative?? Are these RE investments part of the Subprime problem?? Will the bottom fall out for these banks as credit tightens??
  2. PatriotsReign

    PatriotsReign Hall of Fame Poster

    Jan 15, 2007
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    +743 / 9 / -27

    #18 Jersey

    Man, great questions you're asking GJAJ15! I honestly think a banking or financial market person would be best qualified to answer your questions than an economics guy.

    What do you mean by "new economic areas"? Are they new business zones or do they also include new home developments? If they are mainly business zones, what kind of businesses are located in them? Are they in wealthy areas?

    I'm also assuming you're referring to bank branch offices and not totally new banks you never heard of. Keep in mind that every branch of a bank is a standing advertisement for that bank. This is called consumer visibility. There is a strong chance they are competing for the small businesses in these new areas. Chances are, businesses other than the banks came first and then the banks came seeking to compete for their business.

    Also, I don't know the specifics, but the banking industry has become more and more lucrative since the introduction of the ATM. Just think about all the income they provide that never existed before. The number of fees on several other services charged by banks has increased dramatically since the 1980's....just think about the "minimum deposit required" clauses that several US banks have instituted. Add to that the "over-draft" protection fees that so many Americans have wasted their money on because we have forgetten how or have become too lazy to balance our checkbooks.

    But regardless of their profitability, several of them will fail in the coming years if our current economic trends continue. And I predict it will continue for even longer than I originally suspected.

    I'd love to read a banking/financial person's view on your questions.
    Last edited: Oct 4, 2008
  3. weswelker#83

    weswelker#83 In the Starting Line-Up

    Dec 13, 2007
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    +15 / 0 / -0

    Banks in Florida and California behaved like pigs,last 7 years,with heavy exposure to subprime loans .

    In mass. , our banks are (still) in good shape
    Mass. banks stand to make gains - The Boston Globe
  4. maverick4

    maverick4 Banned

    Jan 17, 2005
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    +17 / 0 / -0

    It is possible those new areas are owned by a banking conglomerate.

    The banking industry is consolidating big time, so you're seeing these ridiculously massive super banks going around setting up shop now.

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