Sorry WL but I have to disagree. For a start, I'm not sure what your concept of Lenin's concept of banks actually is.
This time around people started to notice the crisis when there was a run on a building society type bank in the UK. I predicted something tumultuous would happen when I saw that the price of oil futures had peaked just under 150 dollars to the barrel (and I still think this had something to do with 'capital drying up' at the investment banks). Then the turmoil began with the mortgage brokers. However, if we look at the 1907 crisis we actually see a lot of continuity and analogues. We see the panic actually starts and is expressed in institutions that are outside the 'traditional bank' of the era but have taken on functions in areas of business and the country that the banks didn't. http://eh.net/encyclopedia/article/moen.panic.1907 excerpt: Why Were There Runs on Trust Companies? There were three main types of financial intermediaries during the National Banking Era: national banks, state banks, and later in the period trust companies. It is not surprising that trust companies were the focal point of the panic. In New York, assets at the trust companies had grown phenomenally between 1890 and 1910, increasing 244 percent during the 10 years ending in 1907, from $396.7 million to $1,394.0 million. In contrast, national bank assets had grown 97 percent, from $915.2 million to $1,800.0 million, while state-chartered bank assets had grown 82 percent, from $297 million to $541.0 million (Barnett 1911, 234-35). Thus the manner in which trust companies used their assets greatly affected the New York money market (Moen and Tallman 1992). Trust companies were much less regulated than national or state banks in New York. In 1906 New York State instituted a requirement that trusts maintain reserves at 15 percent of deposits, but only 5 percent of deposits needed to be kept as currency in the vault. Before that time trusts simply kept whatever reserves they felt necessary to conduct business. National bank notes were adequate as cash reserves for trusts while national banks in central reserve cities like New York were required to keep a 25 percent reserve in the form of specie or legal tender (greenbacks or treasury notes but not national bank notes). Trusts were originally rather conservative institutions, managing estates, holding securities, and taking deposits, but by 1907 trusts were performing most of the functions of banks except issuing bank notes. Many of the larger trusts specialized in underwriting security issues. Others wrote mortgages or invested directly in real estate activities barred or limited for national banks. New York City trusts had a higher proportion of collateralized loans than did New York City national banks. Conventional banking wisdom associated collateralized loans with riskier investments and riskier borrowers. The trusts, therefore, had an asset portfolio that may have been riskier than those of other intermediaries. National and private banks found the investment banking functions of trusts so useful that many of them gained direct or indirect control of a trust through holding companies or by placing their associates on a trust's board of directors. In many instances a bank and its affiliated trust operated in the same building. Trusts appear to have provided intermediary functions different from those of banks. Although the volume of deposits subject to check at trusts was similar to that at banks, trusts had many fewer checks (in number and value) written against their demand deposits than did banks. The check clearings of trusts were only about 7 percent of the volume of those at banks. Trusts were not then like commercial banks, whose assets are used as transactions balances by individual depositors or firms. National banks were part of a network of regional banks that had correspondent relationships to expedite interregional transactions (James 1978, 40). Trusts were not part of the correspondent banking system, so their deposits were more local and less directly subject to the recurring seasonal strains on funds. _______________________________________________ Marxism-Thaxis mailing list Marxism-Thaxis@lists.econ.utah.edu To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
