The Huffington Post brings us a wonderful montage of film and news about banking. Simplistic, but thought provoking. And of course, it makes us question those bank bonuses again!
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Random Thoughts on Vexing Issues
That's a strong message, and important to consider. However, one must also consider the added risks associated with a smaller firm. If all people decided to invest in there community banks, then that would be pareto efficient. Although if one person tries to make that decision, they have to think about if another person would invest there money in that small bank. If not, then that person deciding will be better off in a larger bank with a smaller chance to default. Unfortunately this is sub optimal but is inevitable given the market structure. There has to be a better financial framework which would provide support and incentives for these smaller banks. Only then will people be able to spread the wealth over the country and create a much healthier and viable economy.
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