My 50 Favorite Quotes About Banking

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Banking is fascinating. Not only does it provide the lifeblood of capitalism -- namely, credit -- but its history is uniquely coherent. Railroads, automobiles, telephones, airplanes, oil companies, and technology firms all came after banks. Even today, some of our biggest banks trace their roots back to the founding of the United States.

It's for these reasons and others that I've developed a keen interest in not only how banks operate currently, but also in the evolutionary process that led to this point. I've read dozens of books, compiling countless quotes along the way, and figured that now is as good a time as any to share my favorites. What follows are 50 quotes I've found to be the most enlightening about banking.

"Progress is cumulative in science and engineering, but cyclical in finance." -- James Grant, author of Money of the Mind: Borrowing and Lending in America from the Civil War to Michael Milken

"Unburdened with the experience of the past, each generation of bankers believes it knows best, and each new generation produces some who have to learn the hard way." -- Irvine Sprague, former chairman of the Federal Deposit Insurance Corporation and author of Bailout: An Insider's Account of Bank Failures and Rescues

"There are more banks than bankers, and that's fundamentally the problem." -- Morris Shapiro, president of M.A. Schapiro & Co., an investment banking company that arranged many of the bank industry's biggest mergers

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"Banking is very good business if you don't do anything dumb." -- Warren Buffett, chairman and CEO of Berkshire Hathaway

"Adventure is the life of commerce, but caution is the life of banking." -- Walter Bagehot, author of Lombard Street: A Description of the Money Market

"I do not think you can trust bankers to control themselves. They are like heroin addicts." -- Charlie Munger, vice chairman of Berkshire Hathaway

"Irrational lenders come and go -- mostly they go!" -- John Stumpf, chairman and CEO of Wells Fargo

"Being a [bank] director is like being a pilot of an aircraft -- it's years of boredom and seconds of terror." -- unnamed bank director quoted by Moira Johnston in Roller Coaster: The Bank of America and the Future of American Banking

"Growth 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 Grant, author of Money of the Mind: Borrowing and Lending in America from the Civil War to Michael Milken

"[B]anks have never made money in the history of banking, losing the equivalent of all their past profits periodically -- while bankers strike it rich." -- Nassim Taleb, author of The Black Swan: The Impact of the Highly Improbable

"The 'sound' banker, alas! is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him." -- John Maynard Keynes

"You don't run a business hoping you don't have a recession." -- Jamie Dimon, chairman and CEO of JPMorgan Chase

"The conservative banker is an impressive specimen, diffusing the healthy glow which comes of moderation in eating, living, and thinking. He sits in state and spends his days saying, with varying inflections and varying contexts, 'no.' ... He says 'yes' only a few times a year. His rule is that he reserves his yesses for organizations so wealthy that if he said 'no,' some other banker would quickly say 'yes.' His business might be defined as the lending of money exclusively to people who have no pressing need of it." -- Fred Schwed Jr., author of Where Are the Customers' Yachts?

"Banks get in trouble for one reason: They make bad loans." -- Carl Webb, co-managing member of Ford Financial Fund, a private equity firm focusing on equity investments in financial services

"It is an axiom nowadays that no bank fails for lack of capital; unprofitable lending is always the underlying cause." -- James Grant, author of Money of the Mind: Borrowing and Lending in America from the Civil War to Michael Milken

"When you're in a commodity business, the only way to thrive is to be a low-cost producer. And when you're selling money, you're in a commodity business." -- Duff McDonald, author of Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase

"In financial services, if you want to be the best in the industry, you first have to be the best in risk management and credit quality. It's the foundation for every other measure of success. There's almost no room for error." -- John Stumpf, chairman and CEO of Wells Fargo.

"[W]hen you think about what in fact distinguishes a bank as a lender, it's how much money it loses on the assets it chooses to take risk with." -- Joseph Ficalora, chairman and CEO of New York Community Bancorp

"In the simplest sense, the key to the performance of any traditional commercial bank ... is the profitability of the loans it makes." -- Robert Wilmers, chairman and CEO of M&T Bank

"Banks fail in the vast majority of cases because their managements seek growth at all costs, reach for profits without due regard to risk, give privileged treatment to insiders, or gamble on the future course of interest rates. Some simply have dishonest management that loots the bank." -- Irvine Sprague, former chairman of the Federal Deposit Insurance Corporation and author of Bailout: An Insider's Account of Bank Failures and Rescues

"The banking business is no favorite of ours. When assets are twenty times equity -- a common ratio in this industry -- mistakes that involve only a small portion of assets can destroy a major portion of equity. And mistakes have been the rule rather than the exception at many major banks." -- Warren Buffett, chairman and CEO of Berkshire Hathaway

"[T]he only good loan is one that gets paid back." -- Robert Wilmers, chairman and CEO of M&T Bank

"[T]he first bad bank loan was no doubt made around the time of the opening of the first bank." -- James Grant, author of Money of the Mind: Borrowing and Lending in America from the Civil War to Michael Milken

"Deposit insurance has proved to be the crack cocaine of American finance." -- Martin Mayer, author of The Greatest-Ever Bank Robbery: The Collapse of the Savings and Loan Industry

"You can't control income. It varies based on conditions outside of [your] control. But you can control expenses." -- Sandy Weill, former chairman and CEO of Citigroup

"Banking is necessary. Banks are not." -- Wells Fargo's 2004 annual report

"The inescapable truth in that there are just too many banks in this country chasing too few customers." -- Dick Rosenberg, former CEO of Bank of America

"The goal [is] not only to earn high returns at the top of the cycle but also to avoid giving them back at the bottom." -- Duff McDonald, author of Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase

"The United States, to be sure, has 13,000 banks, but the problem is that it does not have 13,000 bankers." -- Carter Golembe, author of But I Never Made a Loan: My Career in Banking-The Early Years

"If you're competing for the highest quality credit, by definition it's going to be on the lower end of the pricing spectrum. ...If that's what's important to you, then how do you supplement lower yields in your loan book? And you do that with the diversity that fee businesses bring to your revenue streams." -- Mike Hagedom, president and CEO of UMB Bank

"I believe that there is an important kernel of truth in the idea that financial errors recur every other generation." -- James Grant, author of Money of the Mind: Borrowing and Lending in America from the Civil War to Michael Milken

"No one has the right to not assume that the business cycle will turn! Every five years or so, you have got to assume that something bad will happen." -- Jamie Dimon, chairman and CEO of JPMorgan Chase

"Our industry is one in which the services of the leading investment bankers are all pretty much the same. So, I've always believed that one's reputation is extremely important and that decisions are often made according to the general reputation a firm has, not so much by the fact that they will perform a servce a little cheaper and a little faster. Reputation is what matters." -- John Whitehead, former chairman of Goldman Sachs

"Money never declines. Money just moves." -- Dick Kovacevich, former chairman and CEO of Wells Fargo

"I think it's essential to remember that just about everything is cyclical. There's little I'm certain of, but these things are true: Cycles always prevail eventually." -- Howard Marks, chairman and CEO of Oaktree Capital Group

"It is in the nature of an industry whose structure is competitive and whose conduct is driven by supply to have cycles that only end badly." -- Barbara Stewart, former corporate economist for The Chubb Corporation

"Good Banking is produced not by good laws, but by good bankers." -- Hartley Withers, prominent British financial journalist around the turn of the 19th century

"I am personally waiting for the first Hollywood epic that will have a banker as its hero, but that probably won't happen anytime soon." -- Carter Golembe, author of But I Never Made a Loan: My Career in Banking-The Early Years

"Bank confidence is a fragile reed, and a troubled bank is damaged by any rumors, true or not." -- Irvine Sprague, former chairman of the Federal Deposit Insurance Corporation and author of Bailout: An Insider's Account of Bank Failures and Rescues

"Don't do anything stupd. And don't waste money. Let everybody else waste money and do stupid things; then we'll buy them." -- Jamie Dimon, chairman and CEO of JPMorgan Chase

"It's not just whether you tell the truth. It's whether you even shave the truth." -- Daniel Tully, former CEO of Merrill Lynch

"I advise other companies' CEOs, don't fall into the trap where you go, 'Where's the growth? Where's the growth?' Where's the growth?' They feel a tremendous pressure to grow. Well, sometimes you can't grow. Sometimes you don't want to grow. In certain businesses, growth means you either take on bad clients, excess risk, or too much leverage." -- Jamie Dimon, chairman and CEO of JPMorgan Chase

"There's only so much good business out there." -- James Sexton, former director of supervision at the Federal Deposit Insurance Corporation

"It is nowhere written that banks cannot fail." -- Louis Schirano, former international debt restructuring specialist at First Interstate Bancorp

"Analyzing or investing in [Bank of America] is like cohabiting with a two-ton rhinoceros: When it's good, it's not very good, and when it's bad, it's really beastly."-- Don Crowley, former Keefe, Bruyette bank analyst

"If commentators and students of the U.S. banking system could be said to agree on any single point, it would be that the system now in place is absurdly complex and inefficient." -- Carter Golembe, author of But I Never Made a Loan: My Career in Banking-The Early Years

"The 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, author of Money of the Mind: Borrowing and Lending in America from the Civil War to Michael Milken

"Every banker knows that if he has to prove he is worthy of credit, in fact his credit is gone." -- Walter Bagehot, author of Lombard Street: A Description of the Money Market

"Despite our best efforts to find other alternatives, certain banks are too big to let fail and some of the smaller ones cannot be saved." -- Irvine Sprague, former chairman of the Federal Deposit Insurance Corporation and author of Bailout: An Insider's Account of Bank Failures and Rescues

The article My 50 Favorite Quotes About Banking originally appeared on Fool.com.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Bank of America, Berkshire Hathaway, Goldman Sachs, Oaktree Capital, and Wells Fargo. The Motley Fool owns shares of Bank of America, Berkshire Hathaway, Citigroup Inc, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.