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09/22/2010

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Katya

Hi

Nice article. But have a few questions.

Will there be fewer banks now? And how will fewer banks help when economy starts growing?

Fewer lenders and fewer loans on credit cards--is that good for consumption driven US market?

Regards,
Katya N

Bhuma

Thanks for writing in, Katya.
Yes, there will be fewer banks now. If these banks are well capitalized and loaded with deposits, they can service the economy well whenever growth picks up -- even if they are fewer in number. The only flipside is that banking assets will be more concentrated in fewer hands.
As for the historically consumption-driven US mkt, habits have already begun changing. The domestic savings rate is at unsually high levels of 6.2%.

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