Collection: Charlie Munger - #103 'Banking Industry'



So a question that’s almost personal, given my research, I can’t resist asking about innovation in finance. Over the last half century, it’s a sector that’s gone through several upheavals, radical change.

To go back to the time when you were born, there were 30,000 banks in the U.S. None of them were very, very large. A few New York banks were big, and now the top 20 banks account for almost everything.

But the range of innovation in finance has been huge, and there’s a debate in academic finance, for sure, about how much of this innovation is helpful to the markets versus how much actually creates instability.


Well, I have a very clear opinion on that.

I think the early innovation that the Bank of America did under Gianinni, where he helped all these immigrants with these loans of all kinds, and he kinda knew which ones were good for it and which ones weren’t, I think that was all to the good – that brought banking to the – and banking helped to a lot of people that deserved it. It helped the economy. It helped everybody.

But once banking got so they wanted to be in soft white hands and make zillions as speculators, I don’t think those developments have been a plus. In other words, I like banking when they’re trying to avoid losses prudently.



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