The End of Banking as We Know It:
The bright side is that all those displaced financial services professionals can now set their sights on doing something, well, truly useful.
Still, this adjustment will be painful for all those who have to carve out new careers, as well as for New York and other places these companies call home.
Finally, what will a humbled financial services industry mean for consumers? Higher borrowing costs, Mr. Miller said.
“The leverage that these companies were using allowed them to lower their rates,” he said. “Rates have to go higher for the banks to operate in a safe and sound manner and make money.”
Credit is also likely to remain tight, in Mr. Miller’s opinion. A result is that consumer spending won’t recover to bubble levels.
The bloated banking sector did have a use: propping up conspicuous consumption in a culture where for a small moment everyone fancied themselves a potential real estate millionaire in the making. It seems the current opinion is that all those extra iBankers were like all the extra bureaucrats at any large corporation; no value added except for their own bottom line. To be fair, I think this argument could be made about most scientists and science. But there is a structural difference between science & finance. Just because 99.99% of scientific possibilities are false leads, it doesn’t mean that it is then acceptable that 99.99% of financial decisions are also missteps. In finance the remaining 0.01% of decisions won’t result in something like electricity or the railroad.
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