Sunday, October 4, 2020

Vox Popoli: Mailvox: a warning sign

A reader writes about an observation he has made in his travels through various small towns:

I don't know what is going on but something is happening below the surface. Locally, the various banks have been shutting down branch offices all over. In the small towns, who owns the prime property at the intersection of Main and State Streets? Banks.

I was talking to someone whose husband ran a branch is a small town. The bank shut down that office. He got out of finance. In a small town of 5,000 in the borough and another 5,000 or so in the township, a big player shut down its branch. That property is now up for sale. That office had been in existence as long as I can remember.

This town used to have in the early 80s a Chevy-Oldsmobile, Ford, Dodge, Chrysler-Plymouth, and Pontiac-Buick dealerships. All are gone now. The Chrysler dealership built a new building in another small town in the county. The original location deals only in used cars now.

Something is up with the banks.

Banks don't make their money from deposits anymore. And increasingly, they don't make money from loans anymore. So there simply isn't any point in maintaining branches for service to non-revenue-producing customers who have no savings and can't take out any more loans.

It's interesting that they're trying to sell the real estate, though. That tends to indicate that they need cash. It won't be even remotely surprising if the next financial crisis starts later this month; I would be very surprised if it didn't start before the end of 2021.