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Buying power and banking power

There's power in numbers. That physical fact is being utilized by dozens of small restaurants that have signed up with a buying group to control their food and equipment costs. The Dining Alliance is a Massachusetts-based company that negotiated deals with suppliers so small restaurants can get prices like the big chains. The restaurant supply business is a opaque world where suppliers reps negotiate different deals with each restaurant. The buying group seeks to clarify that process.

Banks, once a bastion of certitude and rectitude, have sunk in people's estimation to the level of used-car salesmen. The latest scandal of British bank Standard Chartered allegedly laundering money for Iran is just the most recent. HSBC has been fined for similar offenses. The economics behind the recent bank scandals is simple: bankers earn incentives (aka: huge bonuses) when they hit their budget targets. Ergo, they cut deals with anyone to make their numbers. Here are some stories on the latest scandal.

From the New York Times: The agreement is a victory for Benjamin M. Lawsky and his 10-month old agency, the New York Department of Financial Services.

From the London Daily Mail:  Standard Chartered staged a remarkable turnaround in a very short time after being confronted with allegations of money-laundering for Tehran.

From Investors Daily: Investors who don’t own shares of the bank should view the recent sell-off as a buying opportunity.




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