Isaac Chan’s Reviews > The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance > Status Update
Isaac Chan
is on page 18 of 812
Note 1/2:
A thought just struck me: since my uni days I had been fixated on the concept that investment banks are the mightiest financiers of the economy - they are the institutions who financed corporations that directly create value for us in the real economy, e.g. General Electric, Apple, Honda and whatnot. They raise capital via ECM and DCM, and a company would go to an investment bank if they need funds either
— Mar 24, 2026 04:53AM
A thought just struck me: since my uni days I had been fixated on the concept that investment banks are the mightiest financiers of the economy - they are the institutions who financed corporations that directly create value for us in the real economy, e.g. General Electric, Apple, Honda and whatnot. They raise capital via ECM and DCM, and a company would go to an investment bank if they need funds either
Like flag
through selling its stock or its bonds. I was but vaguely aware of commercial banks - I just knew they were just in the business of making loans and taking deposits.
But this directly squares against my current experience - the loans that commercial banks hand out can be massive, running into the hundreds of millions! Why would a business go to an investment bank for capital, then, unless they are going public? If a business needed debt, a loan from a commercial bank would most likely be cheaper than an investment bank's DCM offerings due to the latter's overpriced fees. In Asia, bank loans are among the most highly-used sources of debt; in developed economies, the vast swamp of private capital out there makes me wonder why a business would turn to an investment bank.
Chernow makes an astute observation: bankers' monopoly on capital is over and will probably never return. His description of a time when bankers, due to their rationing of scarce capital, gave them prestige and control over blue-chip corporations and even governments, is a fairy-tale to me. The house of Morgan did not need to hustle for business because a Morgan account conferred prestige to a company and access to an elite club - this made me reflect on how the abundance of capital (no doubt a result of QE, amongst other secular economic trends) forces our bank to hire so many RMs and make them hustle and compete for business, whilst raising sales targets to ever-higher levels.
An interesting observation: the largest corporations now own more total assets than any regular bank! Big business has flipped the table.
Total assets of: (FY2025)
Apple: $359B
Nvidia: $206B
JPM: $4.5T
Wells Fargo: $2.15T
Blackrock (AUM): $14T
Vanguard (AUM): $12.5T
Maybank: RM1T ($253B)
HLB: RM314B (~$105B)
Petronas: RM775B
Sunway Group: RM31B
Some reflections:
1) The largest US banks own more assets than the largest US corporations. This tells me that although the largest US corporations have lots of capital, the largest US banks still have space to raise capital for them.
2) Asset ownership is extremely skewed, whereby big business owns the vast majority whereas the average business owns extremely little (median: $102k. Source: Federal Reserve Survey of Consumer Finances 2019). This SME/ average corporate landscape is still a ripe opportunity set for modern banks. If I were the CEO of a bank, I would target this segment.
3) The largest Malaysian banks still own more assets than the largest Malaysian corporations.
4) Large asset managers have significantly outpaced the largest US banks in terms of total assets. 'The House of Morgan' is significantly dated on this competition between the banks and the asset managers.
5) The largest corporations today are more capital-rich than ever since they no longer hold much physical capital. This is an age of capitalism without capital.
6) No matter how much capital today's corporations own, there will always remain a demand for bank credit due to banks' ability to create money out of thin air, as bestowed by the modern banking system and fiat money. This depends on the state's continued expansion of the economic bubble, to sustain the demand for loanable funds.