[C]apitalism without financial failure is not capitalism at all, but a kind of socialism for the rich.
James GrantGrowth at an exceptional rate is a red flag in banking. It is hard enough to manage an ordinary bank; to control a sprouting weed is well-nigh impossible. If loans are expanding too quickly, the lending officers have probably been saying 'yes' too frequently.
James GrantIt is an axiom nowadays that no bank fails for lack of capital; unprofitable lending is always the underlying cause.
James GrantThe art of banking is always to balance the risk of a run with the reward of a profit. The tantalizing factor in the equation is that riskier borrowers pay higher interest rates. Ultimate safety - a strongbox full of currency - would avail the banker nothing. Maximum risk - a portfolio of loans to prospective bankrupts at usurious interest rates - would invite disaster. A good banker safely and profitably treads the middle ground.
James Grant