Failing Banks, Inevitable Consolidation?

Dan's picture

We can certainly point to many Pareto or power law distributed phenomenon in the "natural" world as well as those created by man. The business world is certainly no exception. In addition, many industries or markets see disruptive events that don't necessarily mediate a redistribution of wealth but trigger a redistribution. Inevitably, the distribution seems to often reflect a pareto style distribution. Is the banking industry any different? Was the recession the disruptive event that set the events in motion for a redistribution of wealth among the banking industry? Are we seeing the "long tail" of the banking industry shrinking? It seems so. If the trend continues, will we see a lot more shorts in the small banks? Food for thought.