• Smothered by a Boom in Banking
    http://www.nytimes.com/2015/03/01/business/economy/smothered-by-a-boom-in-banking.html

    Attendees at last week’s JPMorgan Chase annual investor day once again asked the question that no big bank executive wants to hear. Wouldn’t shareholders be better off if the company were smaller or broken up?

    No, no and no, JPMorgan replied. “Scale has always defined the winner in banking,” said Marianne Lake, the company’s chief financial officer.

    It is to be expected that all big bank executives believe in big #finance. They benefit from being giant, after all.

    For the rest of us, though, it’s worth noting that the effects of a dominant financial industry are far less beneficial.

    Certainly, as we learned in 2008, when megabanks get into trouble, they line up for bailouts. This imperils taxpayers.

    But even during good times the impact of big finance can be negative for the world at large. According to a compelling new paper published two weeks ago by the Bank for International Settlements, high-growth financial sectors actually hurt the broader economy by dragging down overall growth and curbing productivity.

    The paper’s co-authors are Stephen G. Cecchetti, economics professor at Brandeis International Business School, and Enisse Kharroubi, senior economist at the B.I.S. Their findings are a great addition to the debate about how much is too much when it comes to the role finance should play in our economy.

    (...)

    I spoke with Professor Cecchetti last week about the paper. “When I was in college long ago, all my friends wanted to figure out how to cure cancer,” he said. “But by the 1990s, everyone wanted to become hedge fund managers. Do we want to have more hedge fund managers or more people trying to figure out how to solve our energy and environmental problems or otherwise improving our lives? That’s the way I think about the problem.”

    #Interêt_général #économie #banksters