[Chapter 463: Traditional Banking]
White Bank completed its business integration, completely abandoning its investment-related operations. It had become a traditional savings bank.
The emergence of this giant financial institution shocked Wall Street. They knew William White had been acquiring banks, but they had no idea he had built a behemoth.
While the consortium was taken aback, they also sighed in relief. They didn't care much for traditional banks; that wasn't their game.
Of course, William White wouldn't choose to run an investment bank because the waters ran too deep. You could only pick one -- traditional banking or investment banking. Trying to do both would lead to a forced breakup.
The major investment banks in the U.S. had originally been integrated banks. They transformed into specialized investment banks due to antitrust regulations.
There were certainly many benefits to this. Without guaranteed profit from interest spreads, they began to focus on various financial innovations. In the end, they succeeded, and the U.S. became a financial anomaly.
The subprime mortgage crisis itself didn't cause too much damage; America could definitely withstand it. However, with the myriad products that emerged from it, the situation became terrifying. Not just America, the whole world struggled with it.
Various financial derivatives didn't just appear in the 2000s. The elite on Wall Street excelled at this kind of game.
Mathematics scores were generally poor across the U.S., but that didn't include those of Jewish descent. Their research in mathematical models was top-notch.
Don't think Americans were generous enough to let Jews take a place on their side. In fact, they had no choice. Cowboys were good at robbing but not much at managing.
William White couldn't quite grasp those complicated financial derivatives either. Despite being quite capable, he still worried about getting burned. The investments that appeared very safe on the surface were riddled with traps; even with his wealth, he couldn't fill those holes.
He gathered deposits and loaned them to individuals or businesses that needed funds, then used any excess reserves to buy various government bonds. His conservative business strategy left Filson speechless.
"Sir, this is way too conservative. Given the current economic situation, we don't need to go this far, do we?" Filson proposed, suggesting they at least establish a couple of hedge funds.
"Filson, to me, a bank is a bank. I have my own investment fund and will have an investment company in the future. The only thing I won't get into is investment banking," William White said. He had drawn enough ire already; if he really got into investment banking, the old guard at the Federal Reserve, if they couldn't bring him into the fold, would surely try to bring him down.
Only by sticking to traditional operations could he leave them helpless. No matter what traps they set, he simply refused to be involved.
"Well, if that's how it is," Filson said resignedly, accepting the situation.
"Filson, if we went into investment banking, not only would we disrupt the current balance, but it would also have those consortiums on edge. The most important thing is, the Federal Reserve isn't particularly friendly to me." William trusted his chief aide and think tank enough to share his concerns.
"Those old timers, do you mean they..."
"Haha, Filson, trust me, as long as the profits are sufficient, those greedy pests won't hesitate, even when faced with death."
William White wasn't just sensationalizing the risks. If White Bank became an investment bank, he would clearly become just another consortium. If the bank ran into trouble, all its assets would be hit hard.
Right now, things were ideal. The most traditional and conservative bank was like the banks of the last century.
...
"Traditional banking? You sure?"
"Definitely, sir, not just traditional but excessively so."
Seeing the peculiar expressions of his subordinates made the old man chuckle. William White certainly wouldn't establish an investment bank; but what was this excessively traditional thing?
"Is there a need for internationalization with this kind of bank?"
"I don't know. From what I see, he doesn't seem to plan on going public; it's going to be a thoroughly private bank. Our analysts at Citi can't figure out his intentions."
...
Neither Morgan nor Citi, having spent their lives in banking, could fathom William White's aims. The casual observers were even more baffled. One thing was crystal clear: keeping money here meant very low risk, but of course, the returns would also be minimal.
The makeover at White Bank didn't stir much in the market. Depositors were even somewhat pleased, as the recent wave of bank failures had hurt many.
William White was wealthy, but that wasn't news in the U.S. Hadn't you seen people lining up to buy the PS2? They even had purchase limits! What kind of fast money-making pace was that?
And what about that Tesla car? That one seemed impressive too. Not that you had to stand in line, but you'd have to wait at least a month.
Some folks claimed William White was practicing hunger marketing with things like game consoles, comic book magazines, and cars -- he always produced less than market demand.
William didn't comment on such grumbling. If they weren't satisfied, they could give it a shot themselves.
Overproduction had been a persistent issue. All the farms aimed to breed more cattle, and every factory pushed for maximum production.
Now, up pops a weirdo who sells anything and controls inventory -- everyone found it so annoying.
In the production market that didn't need these goods, you had demand for various items, but you deliberately controlled capacity.
...
"Could we get some orders? We can make those cars too -- OEM, maybe?"
Tesla's Class A car specs were no secret. American and Japanese car manufacturers concluded that this model was very mediocre.
What surprised the Japanese most was how odd Tesla really was. It wasn't as rugged as American cars, nor was it as refined as European ones. It resembled their products but emphasized vehicle safety.
The Japanese were sure the sales of this car wouldn't be poor. Especially after Tesla announced its pricing, they were even more convinced of their judgment.
Tesla's A series was practically just a trimmed version of the Corolla, priced only 5% higher.
...
The United Auto Workers were furious. This brand that waved the American flag didn't sit well with them.
"Can we have some dignity? What business does this so-called Tesla have being associated with America?"
...
Whether it had any connection was unclear, but American consumers were very satisfied. They felt that their country finally had a decent automaker. They were tired of gas guzzlers and didn't want to keep facing costly maintenance bills.
*****
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