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Update on 21 May 2024: Yes, Elizabeth, banking needs to be boring again!

A few weeks ago, I stumbled across an ad from PNC Bank, perhaps embedded in a Google search. It featured the President of PNC Bank boasting about how his bank has been “brilliantly boring since 1865”. And then it became clear that this idea is driving a major public relations campaign by PNC Bank.

Here is a link to one of its ads, perhaps not the one I saw initially but similar:

And here is a link to a 6-minute Bloomberg interview with CEO Bill Demshak about boring banking:

Original article that I posted here on my website, 9 April 2023:

Last October, I submitted a Letter to the Editor of the Financial Times suggesting that banking needs to be boring again, and they published it. Now Senator Warren agrees.

My Letter to the Editor was prompted by an op-ed making the argument that the world of finance has become so complicated that nobody fully understands the risks and the consequences could be disastrous.

Here is the core message in my letter, the full text of which can be found via this hyperlink:

In the graduate course on emerging markets finance that I taught during the 2000s, I suggested to my students that people would not be able to sleep peacefully at night until “banking becomes boring again”. The kind of boring I had in mind was what I saw in the 1950s and 1960s when my father was a lawyer with Citibank in New York checking the fine print of loan contracts with Greek shipowners.

The collapse of Silicon Valley Bank (and a couple of others) a few weeks ago has gotten a lot of press and before long Senator Warren was interviewed on a major TV news channel about the matter. She has stood out for years as the political figure most outspoken on how the financial industry is underregulated and prone to crises. You may remember that she was the impetus behind the establishment of the Consumer Financial Protection Bureau in 2020 as an effort to avoid repeating the Global Financial Crisis of 2007-08.

Lo and behold, in her March 31 interview, Senator Warren led off with the same point:

What I want to do is get banking back where it ought to be, and that is boring,” Warren, D-Mass., said Friday morning on CNBC’s “Squawk on the Street.

Maybe she read my Letter to the Editor! Here is a hyperlink to the CNBC web page where you can find a video of her 8-minute interview.

Lots of laws and regulations would have to be enacted and enforced to make banking as boring as it was from the Depression in the 1930s until the deregulation of the 1970s and 1980s in the Nixon, Ford, and Reagan administrations. This wave of deregulation went far beyond the USA to produce the incredibly complex world of financial technology that exists today.

The odds of making banking and finance boring again must be infinitesimally small. The vested interests are too strong.

Tighten your seatbelts. I can confidently predict another global financial crisis in the next ten years. We narrowly escaped one with the explosion of cryptocurrencies in the past ten years, which was brought down to earth by typical hubris and myopia. The next crisis might emerge from the artificial intelligence (AI) eruption that started just a year ago.

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May 23

Ever since 1981 when Dr. Roger Sperry of Stanford University was awarded the Nobel Prize in Health & Medicine for his discovery that language ability is not confined to either hemisphere of the human brain, but is shared equally between them, the mental health communitty has been struggling to come to grips with the implications of this research. The best (in my opinion) interpretation is that true mental health can be measured in the extent to which mental activity is traceable in coordinated bursts of energy in both hemispheres, resulting in stereognosis. When this incorporates the collection and storage of data, e.g. financial data, this can result in stereognostic, or boring, menntal activity. Just don't say I told you so.

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