Compare a community bank to an organized crime syndicate. The former institution (ideally) lends out money to local creditworthy businesses and individuals, so that they can start new stores, build homes, buy land, and so forth. The bank's profits come from the success of the funded projects. Organized crime has a much simpler business model: Send people around to say, "Pay me or I'll beat you up."

    The former example is the picture-book model of capital allocation. The latter is pure economic parasitism. And in many instances today, Wall Street is closer to the second model than the first.


There was a related round table on CFR recently

"The Finance Industry and Its Impact on the U.S. Economy after the Great Recession

Is U.S. Finance Hurting Growth?"

posted by kleinbl00: 1053 days ago