Financial Intermediation Quotes

Large financial institutions in this country will always play a role that is essential to our economic growth. But they must only be permitted to grow and interconnect, throughout our economy, under careful oversight and with a mechanism for allowing those connections to be broken safely.

What we prefer to do is operate our investment bank in a way that is like what investment banks used to be, which is a middle man - someone who is here to match people who need capital with people who have capital - and not position ourselves at the center of that by taking big positions on a trading stance.

There's no understandable reason why the financial services industry has not developed a more comprehensive sharing of the value chain.

Then came the second Amsterdam discovery, although the principle was known elsewhere. Bank deposits...did not need to be left idly in the bank. They could be lent. The bank then got interest. The borrower then had a deposit that he could spend. But the original deposit still stood to the credit of the original depositor. That too could be spent. Money, spendable money, had been created. Let no one rub his or her eyes. It's still being done-every day. The creation of money by a bank is as simple as this, so simple, I've often said, that the mind is slightly repelled.

There used to be corporations that produced products. Now there are just banks that produce deals, hedge-fund-driven banks and derivatives and those things.

Maturity transformation is a central part of the economic function of banks and many other types of financial intermediaries.

By means of the banking system the distribution of capital as a special business, a social function, is taken out of the hands of the private capitalists and usurers. But at the same time, banking and credit become the most effective means of driving captialist production beyond its own limits and one of the most effective vehicles of crises and swindle.

But in general, as countries get wealthier, there's going to be more savings, which means you're going to have intermediation. So part of it is just the huge growth in wealth, and part of it was globalization - these companies, these clients getting much bigger and much more global.

A striking feature of financial service activities during the past few decades is that the financial transactions essential to the operation of the 'real' economy has become increasingly dwarfed by speculative activity.

The larger unit can borrow more easily in proportion than the smaller. It can especially tap bank credit more easily and bank credit is, to-day, the chief factor in economic activity of all kinds.

Financial service providers act as the lubricating oil in the economy. They link consumers who want to invest their savings for a good return with companies who want to borrow on best terms for expansion.

In the financial system we have today, with less risk concentrated in banks, the probability of systemic financial crises may be lower than in traditional bank-centered financial systems.

The threshold question: Will banks continue to exist? The answer is yes, because society will still need the two essential functions they provide: mobilization of capital from providers to users, and facilitation of payments for goods and services.

Liquidity is oxygen for a financial system.

Narrow banks could restart effective intermediation and ensure that consumers and employment-creating small and medium-size enterprises are adequately financed and can contribute to the reactivation of the economy.