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by hnnewguy
4039 days ago
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>disrupt these banks. What makes you think that the people involved in the disruption of the banks won't partake in the same shenanigans? Do you think "bankers" are inherently evil, while their replacements will be inherently good? The Bitcoin world says otherwise. "Tech people" are stealing people's money left and right. >If the banks are "too big to jail/fail" then maybe we should make them smaller... Sure, and then we'll let all the pseudo-government-controlled banks in say, China, or even Canada do all the large-scale banking business globally. The business of banking is vastly larger than cheqing accounts and ridiculous ATM fees that people like us deal with day to day and complain about. That's why the industry is heavily regulated, and why the banks are so large, and why the local credit union in Podunk isn't underwriting the Facebook IPO. It's also why some SV startup isn't going to ride in and up-end the industry without itself becoming some financial behemoth that needs to be regulated. |
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Right, but until recently the various functions of finance were embodied in different institutions. Due to pressure from the banks themselves and from the threat of competing banks in Europe the Gramm-Leach-Bliley Act[1] was passed in 1999. This allowed banks to get much larger than they were before and to operate as insurers, commercial banks, and investment banks simultaneously, which they were previously prevented from doing.
Now, I agree with you that these are reasons SV startups won't "disrupt" the banking industry. (Nor do I think this is desirable, but that is another topic.) However, the idea that it is good to have massive consolidation of bank functions into one large corporation is not immediately obvious to me.
[1]: http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bli...