Asymptosis

At least this headline holds true for banks. Steve Randy Waldman, as so often, gives us cogency–in this case on why big banks are a problem. My favorite part (and my emphasis):

Scale breeds agency problems. Earning an extra five basis points on $100B in assets amounts to $50M in extra income a year, a fraction of which can make a manager very wealthy in an eat-what-you-kill bank. Making that same five basis points on a $100M portfolio earns a small bank 50K, a fraction of which amounts to a nice bonus, but not a lifestyle change.

For both managers, the downside if something goes wrong is the same: they lose their jobs.

For the managers, big is good. For the rest of us, not so much.

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1. Warren Buffett: Estate Tax Good
2. Why Don’t Shareholders Control Corporations?
3. “Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity Is Not Expensive”
4. Inequality is Bad Because it Hurts the Republican Brand
5. Obama and Small Business Cap Gains: Where’s the Beef?