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Morning Reading

Scott Jagow Jul 28, 2009

Bank of America is no longer expanding from sea to shining sea. It seems to be medium-izing itself. Nothing wrong with that. But they might have to change the name to Bank of Most of America.

The Wall Street Journal reports that B of A plans to close 10% of its branches (more than 600). I don’t know that I trust CEO Ken Lewis to be a seer of the future, but he seems to expect people to take more money out of the bank and start spending it:

Mr. Lewis said July 17 that it would be “much tougher” to make money in the second half of 2009.

In last week’s meeting, Mr. Lewis reiterated that it would be difficult to overcome credit problems in the next two quarters, according to people familiar with the conversation, even though the U.S. economy is in the “seventh inning” of deleveraging by consumers. The savings rate isn’t likely to remain at 6% to 7% because that isn’t in the “American gene pool,” he added, according to these people.

From a taxpayer’s perspective, there’s nothing wrong with a big bank getting less big to fail, if you know what I mean. Doug McIntyre at Daily Finance sees the branch closings as a positive development:

The entire banking industry may emerge from the recession in better shape than it has been in a long time. Part of this is due to the deleveraging of their balance sheets and more careful consumer borrowing habits. Banks still face several quarters of wrenching credit card defaults…

Banks are going to save a great deal more money in the future by closing retail outlets. The “bank on every corner” period is drawing to an end.

The WSJ also says the government’s program to modify mortgages isn’t working so well:

Among the problems: Some homeowners are being told they must be behind on their payments to receive help, which runs counter to the aim of the program. In other cases, delays are so long that borrowers who are current on their payments when they ask for a loan modification are delinquent by the time they receive one. There is also confusion about who qualifies.

More of Fed Chairman Ben Bernanke on the PBS NewsHour, answering questions about the “failure” of the stimulus package and what’s going on in the job market:

I found this a revealing paragraph in a Washington Post story about the health care debate:

At a recent town-hall meeting in suburban Simpsonville, a man stood up and told Rep. Robert Inglis (R-S.C.) to “keep your government hands off my Medicare.”

“I had to politely explain that, ‘Actually, sir, your health care is being provided by the government,’ ” Inglis recalled. “But he wasn’t having any of it.”

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