'Beware Private Equity Firms Bearing Gifts': Comments of the Week
August 28, 2015 7:30 AM
American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of AmericanBanker.com articles and from our social media platforms.
On activist investor Lawrence Seidman's calls for a North Carolina bank to sell itself:
"A good lesson for community banks wanting to remain independent: beware of private equity companies bearing gifts. Nothing inherently wrong with PE, but you need to understand their drivers are much different than those of the traditional community bank."
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On the motivations of former prosecutors and enforcement officials weighing in on the Justice Department's failure to bring charges against bankers after the financial crisis:
"It's always easier to try the other person's case, especially when the press will publish your comments and you want to run for office."
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On the level of control that lenders have over loan performance after money has changed hands (<a href="https://twitter.com/AlexH_Johnson/status/636635141381615616" target="_blank">via Twitter</a>):
"There's this assumption that after we make a loan, the die is cast and we have no control over its outcome. Wrong!"
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On the debate over whether the young marketplace lending industry poses a systemic risk to U.S. economy:
"Until an innovation has weathered a full economic cycle, it is wise to reserve judgment."
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In response to analysts who say that a Fed rate hike wouldn't have done much to boost banks' margins:
"Privately held banks and more importantly, their customers, are being hurt and disadvantaged by the Fed's unprecedented near zero-interest-rate policy. We have fallen into the trap that Japan fell into in the early 1990's and is still struggling to get out of. Metaphorically, we are in an economic circular firing squad."
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On the usefulness of annual percentage rates as a tool for understanding the cost of a short-term loan:
"The customer for a $300 one-month loan has no idea what the APR means, because the customer has no intention to get involved in a one-year arrangement. The customer wants to know how much this will cost, e.g. $30. When a customer stays at a hotel, or rents a car for a few days, he or she doesn't know and doesn't care how much it would cost for a year. Telling him or her that is irrelevant and misleading."
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On the degree to which Dodd-Frank accelerated the long-running decline in the number of community banks (via <a href="http://www.arkansasbusiness.com/article/106652/correlation-causation-gwen-moritz-editors-note?page=all" target="_blank"><em>Arkansas Business</em></a>):
"While it has certainly felt to me, anyway as if banks are choosing to either acquire or be acquired in order to create the economies of scale needed to afford the increased cost of regulation, how things feel and what the data show are not always the same thing."
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