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The article titled "Yelling 'Fire' in the Financial Theater: Bank Runs in the Social Media Age and the Threat to Financial Stability" explores the impact of misinformation and disinformation on social media platforms, specifically in relation to bank runs. It discusses how misinformation spreads quickly and widely on social media, posing a threat to various societal institutions, including politics and health. The article uses the example of the failure of Silicon Valley Bank in 2023 to illustrate the role of social media in spreading information and encouraging depositors to withdraw their funds. It also examines past attempts to deter bank runs through legislation and highlights the challenges of prosecuting cases related to bank slander. The article emphasizes the difficulty of deterring or punishing misinformation or disinformation about banks spread on social media, as there is currently no consensus on imposing restrictions. It discusses the limitations of legal consequences for social media companies and the need for strategies to slow or prevent bank runs, such as enhanced transparency and the use of trusted validators. The article also raises concerns about the weaponization of bank runs through social media and the spread of state-sponsored disinformation. It calls for reforms in the deposit insurance system to address vulnerabilities in the banking system and ensure public confidence in the safety of their money. The article suggests providing unlimited coverage for business accounts and implementing a risk-based premium system to improve financial stability. It emphasizes the importance of clear communication and the need for congressional action to protect depositors and prevent potential crises. [Extracted from the article]

The article delves into the political underpinnings and significant transformations within the U.S. banking industry spanning the last fifty years. It emphasizes the escalating reliance on government backing and explores the rise of fintech shadow banks as potential challengers. It underscores the implications of government interventions, such as deposit insurance expansions and mortgage credit subsidies, on the banking landscape.

Maintaining sufficient liquidity in the financial system is vital for its stability. However, since returns on liquid assets are typically low, individual financial institutions may seek to hold fewer such assets, especially if they believe they can rely on other institutions for liquidity support. We examine whether state banks in the early 1900s took advantage of relatively high cash balances maintained by national banks, due to reserve requirements, to hold less cash themselves. We find that state banks did hold less cash in places where both state legal requirements were lower and national banks were more prevalent. [ABSTRACT FROM AUTHOR]

Purpose: This study examines the effect of credit card teaser rates on consumer indebtedness and the revenue generated by new customers. Design/methodology/approach: A unique dataset from a national bank in the United States of America is utilized to employ a relatively new method called the covariate balancing propensity score matching, which measures the causal effects of teaser rates. Findings: The results indicate that offering teaser rates improves the revenue generated by customers by indirectly increasing indebtedness. Such offers increase customers' willingness to borrow at regular interest rates that are significantly higher than the teaser rate – the "spillover effects." Interestingly, customers who pay off their promotional balances before the termination of the promotional period borrow even more at regular rates than customers who do not pay off their balances timely. Practical implications: The results can assist managers of credit card companies in measuring the value of teaser rates more accurately. Furthermore, the results have implications for public policy aimed at reducing credit card debt by enhancing the understanding of credit card customers' borrowing behavior. Originality/value: To the authors' knowledge, this is the first study that documents the direct and indirect impacts of teaser rates on credit card customers' borrowing behavior and the resulting bank revenue. [ABSTRACT FROM AUTHOR]

This paper exploits the federal preemption of national banks in 2004 from local laws against predatory lending to gauge the effect of the supply of credit on the real economy. First, the preemption regulation resulted in an 11% increase in annual lending in the 2004-2006 period, which is associated with a 3.3% rise in annual house price growth rate and a 2.2% expansion of employment in nontradable sectors. This was followed by a sharp decline in subsequent years. Furthermore, we show that the increase in the supply of credit reduced delinquencies during boom years, but increased them in bust years. [ABSTRACT FROM AUTHOR]

The only profit-seeking business enterprises chartered by a federal government agency are banks. Yet there is barely any scholarship justifying this exception to state primacy in U.S. corporate law. This Article addresses that gap. It reinterprets the National Bank Act (NBA)-- the organic statute governing national banks, the heavyweights of the financial sector-- as a corporation law and recovers the reasons why Congress wrote this law: not to catalyze private wealth creation or to regulate an existing industry, but to solve an economic governance problem. National banks are federal instrumentalities charged with augmenting the money supply--a delegated sovereign privilege. Congress recruited private shareholders and managers to run these instrumentalities as a check on monetary overissue and to prevent politicized asset allocation by government officials--a form of premodern agency independence. Viewing the NBA as a corporation law yields surprising dividends. First, it exposes a major flaw at the heart of U.S. banking jurisprudence. In recent decades, the Supreme Court and the Office of the Comptroller of the Currency (OCC), the chartering authority for national banks, have interpreted national banks' corporate powers expansively, allowing them to enter a vast range of new business lines. But the corporate powers provision of the NBA is not a regulatory statute to which courts should apply Chevron deference, nor is it part of the OCC's enabling act. It is part of the corporate charters of national banks. Accordingly, the opposite, settled rule of construction applies: ambiguity is construed strictly against the corporation. Second, interpreting the NBA as a corporation law reveals that the OCC's current campaign to unhitch national bank charters from the deposit business lacks a statutory basis and threatens an unprecedented colonization of U.S. enterprise law by a federal government agency that is ill-suited to this mission and was never congressionally tasked with it. [ABSTRACT FROM AUTHOR]

Banks have particular characteristics that set them apart from other business entities, including being more highly leveraged, benefiting from government safety nets, and generating massive negative externalities when they fail. These attributes mean that in addition to shareholder interests, bank directors should be allowed to carefully consider the interests of nonshareholders, such as creditors, taxpayers, and the overall economy, when making decisions. While directors of banks in states that have enacted constituency statutes may be allowed to consider nonshareholder interests, no federal act expressly allows directors of federally chartered banks to consider such interests. Moreover, to date, thirty‐seven states have enacted legislation to allow for the formation of public benefit corporations that require directors to consider the interests of nonshareholders. No federal law provides a clear path for federally chartered banks to do this. This article proposes dual federal legislation that would (1) enable directors of all federally chartered banks to expressly consider nonshareholder constituents when making decisions and (2) allow for the formation of national benefit banks that would require directors to consider nonshareholder interests in their decision‐making. [ABSTRACT FROM AUTHOR]

The article discusses developments in the valid-when-made and true lender doctrines as used in lending litigations in the U.S. as of March 2021. Other topics include the laws covering national banks' and federal savings associations' rights to make loans with interest rates prevailing in their home states like the National Bank Act (NBA), the Home Owners' Loan Act (HOLA), and the Federal Deposit Insurance Act (FDIA).

176 V. CONCLUSION Banks merge in part because a merger increases the bank's capital assets, allows the bank to take the best personnel of the merging banks, and diversifies its deposits and services. 63 The banking factor included consideration of: (1) the financial history and condition of each of the banks involved; (2) the adequacy of the resulting bank's structure; (3) the merged bank's future earnings prospects; (4) the general character of the resulting bank's management; (5) the convenience and needs of the community to be served; and (6) whether or not the bank's corporate powers were consistent with the purpose of the Act. 134 This contention was significant because the merging banks in Phillipsburg National Bank were noted as smaller banks than previously challenged in bank merger violations, indicating that bank size no longer mitigates whether a bank merger violates antitrust laws. 3 A review of bank merger jurisprudence and an appraisal of the DOJ's bank merger review both support the assertion that the DOJ's current guidelines for bank merger review are outdated. I. INTRODUCTION When one bank seeks to merge with another, the bank must do so with the approval of a federal regulatory agency. [Extracted from the article]

Firms are challenged to improve the effectiveness of cross-selling campaigns. the authors propose a customer-response model that recognizes the evolvement of customer demand for various products; the possible multifaceted roles of cross-selling solicitations for promotion, advertising, and education; and customer heterogeneous preference for communication channels. they formulate cross-selling campaigns as solutions to a stochastic dynamic programming problem in which the firm's goal is to maximize the long-term profit of its existing customers while taking into account the development of customer demand over time and the multistage role of cross-selling promotion. the model yields optimal cross-selling strategies for how to introduce the right product to the right customer at the right time using the right communication channel. applying the model to panel data with cross-selling solicitations provided by a national bank, the authors demonstrate that households have different preferences and responsiveness to cross-selling solicitations. in addition to generating immediate sales, cross-selling solicitations also help households move faster along the financial continuum (educational role) and build up goodwill (advertising role). a decomposition analysis shows that the educational effect (83%%) largely dominates the advertising effect (15%%) and instantaneous promotional effect (2%%). the cross-selling solicitations resulting from the proposed framework are more customized and dynamic and improve immediate response rate by 56%%, long-term response rate by 149%%, and long-term profit by 177%%. [ABSTRACT FROM AUTHOR]

We investigate how competing logics facilitate resistance to institutional change, focusing on banking professionals' resistance to large, national banks' acquisitions of smaller, local banks. Acquisitions led to new bank foundings, particularly when out-of-town banks were the acquirers and a community's local population of bank professionals was large. We argue that the national banks' efforts to introduce a banking logic emphasizing efficiencies of geographic diversification triggered new forms of professional entrepreneurialism intended to preserve a community logic of banking. Contributions to a synthesis of ecological and institutional perspectives and to research on entrepreneurship and resistance to institutional change are discussed. [ABSTRACT FROM AUTHOR]

Interest rates under the U.S. National Banking System (1863-1914) appear to imply that banks failed to exploit an arbitrage opportunity for two reasons: Yields on government bonds exceeded the tax rate on note issue by approximately 150 basis points, and short-term interest rates varied seasonally. This paper examines whether note redemption costs can explain observed interest rates. We present a model in which redemption costs create a spread between the tax rate on note issue and bond yields and in which temporary seasonal fluctuations in currency demand generate seasonal movements in short-term interest rates. Calibration of the model to actual data lends support to the model's implications. Further, interest rates are shown not to vary seasonally when banks do not incur the costs of note redemption. [ABSTRACT FROM AUTHOR]

The article reports on the policy statement from the U.S. Office of the Comptroller of the Currency on the issue of financial technology companies being allowed to apply for charters as national banks.

This article presents comments on the failure of the Bank of United States in December 1930 and its role in the economic downswing of 1929-1933. The author reviews the impact of the bank's closure, including currency withdrawal, reduction in bank reserves and deposits, and reduced consumption spending. He asserts that the bank's failure considerably exacerbated the economic recession by reducing bank reserves and consumption. The article is part of an ongoing controversy between Milton Friedman and Joseph Lucia; the author sides with Friedman.

The purpose of this paper is to examine and seek to explain the use of electronic funds transfer system (EFTS) devices by a relatively small proportion of national banks. A focus upon the leaders in the use of these innovations is helpful in establishing the parameters that may affect more widespread use among banks. Data for the study are from a detailed survey of national banks carried out by the Comptroller of the Currency. [ABSTRACT FROM AUTHOR]

It is the objective of this paper to catalogue the effects of the recent large bank failures of the U. S. National Bank of San Diego, the first billion dollar bank to fail, and of the Franklin National, the largest bank to ever fail, upon the returns required by investors in large bank common securities. If these bank failures affected the perceived risk of equity investment in large banks, significantly larger returns must be given to investors to obtain new equity capital for commercial banks. On the other hand, if there has been little change in risk cognizance, perhaps the regulators have overemphasized the significance of bank failures upon the risks in the banking industry and bank managers have overdramatized the difficulty in raising new bank equity capital. The methodology employed in this study is the market model first suggested by Sharpe and later refined and expanded by Sharpe, Lintner, and Fama. The market model of an asset portfolio asserts that (1) &Rtilde;[sub p,t] = a[sub p] + β[sub p]&Rtilde;[sub m,t] + ũ[sub p,t] where &Rtilde;[sub p,t] is the return on portfolio p in time t and where the tilde indicates a random variable. &Rtilde;[sub m,t] is a market factor common to all assets. a[sub p] and β[sub p] are the parameters to be measured and u[sub p,t] is the error term associated with the linear model. This paper will attempt to determine if there has been a significant structural change in investor's cognizance of risk in the large commercial banking industry after the failures of the U. S. National Bank of San Diego on October 18, 1973, and the Franklin National Bank on October 9, 1974. The specific approach will consist of tests on the stability of each of the parameters in the market model over time; namely the intercept value, â, a measure of systematic risk, &bcirc;, and the measure of the unsystematic risk, σu[sub p,t]. [ABSTRACT FROM AUTHOR]

The article focuses on the note issue paradox of American banking in the post-Civil War era. An overview of the conundrum is given, highlighting national bank behaviors inconsistent with profit-maximizing principles and several historiographical interpretations of the behavior, namely that they did not expand note issues in beneficial conditions to do so. Additional examination is offered to free-regime state banks, noting similarities in cost and risk environments to the following national bank-regime era. Conclusions are offered suggesting unseen risk perceptions that prevented the profitable venture.

The purpose of this paper is to determine whether the bank supervisory influence appears to be significant for bank capital positions. This would appear to depend on whether or not different methods of capital analysis result in different prescriptions for capital funds for otherwise comparable banks and on the degree to which banks are responsive to supervisory pressure for capital increments. Once initial requirements for beginning operations are met, the determination of capital is essentially a matter for a bank's board of directors. The possibility exists that there may be differences in the degree of conservatism among directors of the three supervisory classes of banks, that is, other things being equal, one group may be more receptive to supervisory prodding for additions to capital funds or may desire a higher level of capital than another. [ABSTRACT FROM AUTHOR]

Within certain limits, it is possible to guage the timing of banks' gains and losses of funds and of Federal Reserve response to them within each week. Within these same limits, therefore, it is possible to ascertain whether movements during a given week caught the Federal Reserve by surprise or whether some elements of purpose were present. This may be done by searching for any noticeable departure from previously established norms of Federal Reserve policy. It should be noted, however, that the technique described here does no more than narrow the range of guesswork concerning the intentions of the Federal Reserve as revealed by actual developments. It does not pretend to eliminate entirely the need to make judgments. [ABSTRACT FROM AUTHOR]