It used to be the case that if you couldn't get loans from the government or from banks, you couldn't get much money at all. The problem was that Northern Pacific's capital needs were endless, and by September 1873, as credit tightened worldwide thanks to a crash on the Vienna stock exchange and the demonetization of silver, Cooke, who had been funding Northern Pacific from deposits in between bond issuances, could find no more buyers.
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The Brazilian banking system was one of the most concentrated and profitable in the world — five banks controlled over 80% of all deposits, and the average Brazilian paid over 30 times more in banking fees than the average American.
Invest Like the Best with Patrick O'Shaughnessy
Brazil had one of the most concentrated banking systems in the world — five banks controlled over 80% of all deposits — and yet it was one of the most profitable banking systems in the world. The banks were making enormous returns, 20-25% return on equity, while charging customers 300-400% annual interest rates on credit cards.
Invest Like the Best with Patrick O'Shaughnessy
David believes the industry is still in its Blockbuster era, with most of the world's banking still running through branches and incumbent banks, and that AI will make digital banks dramatically more efficient than the incumbents they compete with.
Invest Like the Best with Patrick O'Shaughnessy