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Wall Street as Walmart?


PlanMaestro
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Excellent article on how commercial and investment banks are changing

 

http://nymag.com/news/features/wall-street-2012-2/index1.html

 

When you hear all the evils of regulation, specifically Dodd-Frank and Volcker, remember this line from Dimon:

 

“Certain products are gone forever,” Dimon told me. “Fancy derivatives are mostly gone. Prop trading is gone. There’s less leverage everywhere. Mortgages are back to old-fashioned conservative mortgages—which is a good thing.”

 

And how this is becoming a much simpler business:

 

If you’re a big, smart investor and we can give you the best price and the best service, you’ll still be coming here, just like Wal-Mart and Costco.” - Dimon

 

And this line from Volcker

 

“Finance became a self-justification,” he told me recently. “They made a lot of money trading with each other with doubtful public benefit.”

 

And how finally Wall Street CEOs are calling out the compensation bluff

 

“If you’re really unhappy, just leave,” Morgan Stanley CEO James Gorman bluntly told Bloomberg TV a few days after his bank announced its meager bonus numbers.

 

And your next thought should be ... are commercial banks really a black box today? Check their level III assets and what is included in those derivatives.

 

And as Parsad likes to say, there is no other banking industry in the world more enticing to invest today than the American banking industry

 

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Are the other big banks trying to become more like Wells Fargo?  Does that mean Wells Fargo will have more competition in its heretofore wheelhouse of banking basics and cross-selling?  All else being equal, I might be that much more nervous if I were them, or one of their shareholders.

 

Of course, not all else is equal, but it's an interesting thought experiment.

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