Big banks' balance sheets will swell after the recent turmoil – and that could be bad news for Americans, ex-Barclays boss says
"I think we're going to get a positive surprise by the amount of business that's moved from small banks to the larger banks — not just deposits, but"I think we'll get a pleasant surprise by the trading revenues. Whenever you see this much volatility in the securities market and this kind of movement in US Treasury yields and rates, the banks should do very, very well," he added.
But what's good for the banks isn't necessarily good news for the US as a whole, according to Diamond. He noted that the US has thousands of regional lenders. A concentration of deposits in the hands of a few large lenders would damage most of those institutions, by reducing competition and pushing up banking costs for the average American.
"We have 4,500 banks in this country," Diamond said."No other country has a banking system like the US." "The positive impact that has by providing a better cost structure to lending, to farmers, to small communities, to regions … the competitive nature of those 4,500 banks is very very positive in terms of reducing the overall cost to the consumer," he added.
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