Banking Industry

By: EconomyWatch   Date: 9 September 2010

The Banking Industry was once a simple and reliable business that took deposits from investors at a lower interest rate and loaned it out to borrowers at a higher rate.

However deregulation and technology led to a revolution in the Banking Industry that saw it transformed. Banks have become global industrial powerhouses that have created ever more complex products that use risk and securitisation in models that only PhD students can understand. Through technology development, banking services have become available 24 hours a day, 365 days a week, through ATMs, at online bankings, and in electronically enabled exchanges where everything from stocks to currency futures contracts can be traded .

The Banking Industry at its core provides access to credit. In the lenders case, this includes access to their own savings and investments, and interest payments on those amounts. In the case of borrowers, it includes access to loans for the creditworthy, at a competitive interest rate.

Banking services include transactional services, such as verification of account details, account balance details and the transfer of funds, as well as advisory services, that help individuals and institutions to properly plan and manage their finances. Online banking channels have become key in the last 10 years.

The collapse of the Banking Industry in the Financial Crisis, however, means that some of the more extreme risk-taking and complex securitisation activities that banks increasingly engaged in since 2000 will be limited and carefully watched, to ensure that there is not another bankingsystem meltdown in the future.

Mortgage banking has been encompassing for the publicity or promotion of the various mortgage loans to investors as well as individuals in the mortgage business.

Online banking services has developed the banking practices easier worldwide.

Banking in the small business sector plays an important role. Find various banking services available for small businesses.

Banking Industry in Malaysia

The banking industry in Malaysia dates back to the early 1900s when rapid economic development, as a result of thriving profits from rubber plantations and the tin industry then, saw the opening of foreign bank branches and the setting up of Malaysia’s first domestic bank – Kwong Yik (Selangor) Banking Corporation (now Malayan Banking Berhad) in 1913. Since then, the banking industry has continued its steady growth and expansion until eventually there was a need for a governing body to oversee the activities and operations of the numerous banks in the country.  This led to the establishment of Bank Negara Malaysia (Central Bank), a statutory body which is wholly-owned by the Federal Government.

The constitution, functions and powers of Bank Negara are set out in the Central Bank of Malaysia Act 1958.  The objectives of Bank Negara are to: •  Promote monetary stability and a sound financial structure •  Act as a banker and financial adviser to the Government •  Issue currency and keep reserves safeguarding the value of the currency •  Influence the credit situation to the advantage of the country Financial Institutions Those classified as financial institutions in Malaysia constitute commercial banks, Islamic banks, merchant banks, foreign banks’ representative offices, finance companies and discount houses. Following the successful restructuring and consolidation of the banking sector in Malaysia in 2003, efforts have shifted to building the domestic financial infrastructure.  The industry-wide consolidation of the domestic banking institutions resulted in 54 banking institutions being reduced to ten domestic anchor banking groups: Affin Bank, Alliance Bank, AmBank, Bumiputra-Commerce Bank, EON Bank, Hong Leong Bank, Malayan Banking, Public Bank, RHB Bank, Southern Bank.  These banks have finance company subsidiaries. The first round of banking consolidation was initiated by the government when it imposed a RM2 billion capitalization requirement for banks.  The second phase of consolidation from 2004 onwards could involve further mergers of individual banks and finance company subsidiaries as well as mergers among the ten banking groups. Banking Products and Services The evolution of the banking industry in Malaysia has led to conventional banking products and services, such as deposits and loans/hire purchase, taking on more sophisticated and advanced features such as phone banking, phone-a-loan, auto pay, auto debit, ATMs and online shopping and banking.  These features are facilitated by advanced technological developments that allow bank customers easier and simpler methods and processes of going about their daily banking. In addition to improving banking features and methods, it has also led to the introduction of new products and services like credit and debit cards, investment products (insurance and unit trusts), financing products and services (trade and share financing), trade and credit facilities, remittances, loans to priority sectors and Islamic banking. Base Lending Rate/Interest Rates The Base Lending Rate (BLR) is fixed by Bank Negara Malaysia and is derived from the cost of funds which fluctuates depending on the economic conditions of the country.  Thus, if economic conditions are good, the BLR will be higher and conversely, if economic conditions are poor, the BLR will be lower. Since 1983, with the exception of special loans or priority sectors, all loans charged by banks are at a margin (usually between 0.75% and 2%) above the BLR.  This margin is determined by the respective banks depending on the banks’ own cost of funds and the borrower’s credibility.  Bank Negara has presently set the BLR at 6%.  In Islamic banking, the BLR is known as the base financing rate. Apart from the BLR, which covers loans, other interest rates imposed by banks cover all kinds of deposits.  Some banks even offer joint current and savings accounts which also earn interest.  These interest rates are determined by the banks and tend to vary according to the economic development of the country.  Thus during good times you can expect higher deposit rates but, consequently, loan rates would also go up and vice versa. Banking & Financial Institutions Act 1989 (BAFIA) The Banking and Financial Institutions Act came into force on 1 October 1989 and provides for the licensing and regulation of institutions carrying on banking, finance company, merchant banking, discount house and money-broking businesses.  It also provides for the regulation of institutions carrying on scheduled business comprising non-bank sources of credit and finance, such as credit and charge card companies, building societies, factoring, leasing companies and development finance institutions. Lodging a Complaint Against a Financial Institution If your financial institution is unable to resolve your complaint, you can write to Bank Negara Malaysia’s Banking Mediation Bureau, which handles disputes between customers and financial institutions.  All you have to do is write a letter to the bureau stating your complaint and that you were unable to resolve it with your bank.  You will also need to complete a standard form allowing your bank to disclose to the bureau any information on your account required for the purpose of investigating your complaint. The Banking Mediation Bureau handles complaints relating to the charging of excessive fees interest or penalties; misleading advertisements; unauthorized ATM withdrawals; unauthorized use of credit cards; and unfair practices of pursuing actions against a guarantor. After receiving your official complaint, the bureau will conduct a thorough investigation and see how best to resolve your complaint.  It will speak with you and the officers concerned at your bank before coming to a decision based on its findings.  If you choose to accept this decision, the matter is deemed resolved.  However, if you choose to reject the decision, your only other recourse will be the judicial process where you can proceed with taking legal action against your bank.

The Banking System in Malaysia

The banking system, comprising commercial banks, investment banks, and Islamic banks, is the primary mobiliser of funds and the main source of financing which supports economic activities in Malaysia. The non-bank financial intermediaries, comprising development financial institutions, provident and pension funds insurance companies, and takaful operators, complement the banking institutions in mobilising savings and meeting the financial needs of the economy.

1.1 The Central Bank

Bank Negara Malaysia (the Bank), the Central Bank of Malaysia, is at the apex of the monetary and financial structure of the country. The principal objective of the Bank is to promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy. Its primary functions as set out in the newly enacted Central Bank of Malaysia Act 2009 are to:

•	formulate and conduct monetary policy in Malaysia;
•	issue currency in Malaysia;
•	regulate and supervise financial institutions which are subject to the laws enforced by the Bank;
•	provide oversight over money and foreign exchange markets;
•	exercise oversight over payment systems;
•	promote a sound, progressive and inclusive financial system;
•	hold and manage the foreign reserves of Malaysia;
•	promote an exchange rate regime consistent with the fundamentals of the economy; and
•	act as financial adviser, banker and financial agent of the Government.

To achieve its mandates, the Bank is vested with powers under various laws to regulate and supervise the banking institutions and other non-bank financial intermediaries. The Bank also administers the country’s foreign exchange regulations.

1.2 Financial Institutions

The following table provides an overview of the number of financial institutions as at end-November 2009:

Financial Institution	Total	Malaysian - Controlled Institutions	Foreign - Controlled Institutions
Commercial Banks	22	9	13
Islamic Banks	17	11	6
International Islamic Banks	2	-	2
Investment Banks	15	15	-
Insurers	40	25	15
Islamic Insurers (Takaful Operators)	8	8	-
International Takaful Operators	1	-	1
Reinsurers	7	3	4
Islamic Reinsurers (Retakaful Operators)	4	1	3
Development financial institutions	13	13	-

Banks, including Islamic banks, operate through a network of more than 2,651 branches across the country. Six Malaysian banking groups have presence in 19 countries through branches, representative offices, subsidiaries and joint ventures. There are also 22 foreign banks which maintain representative offices in Malaysia. They do not conduct normal banking business but provide liaison services and facilitate information exchange between business interests in Malaysia and their counterparts.

Following the announcement in April 2009 of the liberalisation measures for the financial services sector which includes the issuances of new licences and increase of foreign equity limits, there has been great interest by international financial institutions to establish presence in Malaysia. The liberalisation measures aim to strengthen Malaysia's economic interlinkages with other economies and enhance the role of the financial sector as a key enabler and catalyst of economic growth.

1.2.1 Islamic Banking Industry

Islamic banking refers to a system of banking that complies with Islamic law also known as Shariah law. The underlying principles that govern Islamic banking are mutual risk and profit sharing between parties, the assurance of fairness for all and that transactions are based on an underlying business activity or asset.

These principles are supported by Islamic banking’s core values whereby activities that cultivate entrepreneurship, trade and commerce and bring societal development or benefit is encouraged. Activities that involve interest (riba), gambling (maisir) and speculative trading (gharar) are prohibited.

Malaysia has emerged at the forefront in the development of Islamic finance and has a comprehensive and vibrant Islamic financial system which includes Islamic Banking, Islamic Capital Market, Takaful and Retakaful, and Islamic Interbank Money Market. Presently, Malaysia’s Islamic banking assets reach RM281.7 billion (USD82.9 billion at exchange rate of 3.4) with an average growth rate 18-20% annually.

In terms of product offering, more than 60 Islamic financial products and services are available in the market. The emergence of new innovative products and financial instruments that incorporate globally accepted Shariah principles such as musyarakah mutanaqisah home financing, Ijarah sukuk, commodity murabahah deposits and Islamic profit rate swap in the industry have further elevated the domestic Islamic financial sector to the next stage of advancement.

1.2.2 Development Financial Institution

Malaysia has several development financial institutions (DFIs) that were set up with specific objectives to develop and promote strategic economic sectors, including the manufacturing, agriculture, infrastructure and maritime sectors, small and medium enterprises (SMEs), as well as sectors that are export oriented.

These DFIs complement the banking institutions by providing a range of specialised financial and non-financial products and services to suit the needs of the targeted strategic sectors. These include the provision of medium to long-term loans, equity capital, guarantees for loans and a range of supplementary financial and business advisory services. Currently, six DFIs have been placed under the purview of the Development Financial Institutions Acts 2002 and regulated by the Bank to enhance the overall performance, efficiency and effectiveness in delivering their mandated roles.

1.3 Malaysia International Islamic Financial Centre

In August 2006, the Malaysia International Islamic Financial Centre (MIFC) initiative was launched to promote Malaysia as a major hub for international Islamic finance.

The MIFC initiative comprises a community network of financial and market regulatory bodies, Government ministries and agencies, financial institutions, human capital development institutions and professional services companies that are participating in the field of Islamic finance.

This market vibrancy is reflected by the continual innovation in providing a wide range of Islamic financial instruments, and growth in the number of domestic and international financial institutions. It is further supported by thought leaders and a robust legal, supervisory and regulatory framework coupled with strong Government support, and global Shariah best practices to conduct Islamic finance activities such as Sukuk Origination, Islamic Fund and Wealth Management, International Islamic Banking, International Takaful and Human Capital Development, while enjoying attractive incentives.

The establishment of the MIFC as one of the key intermediation linkages in the global market place, has an important role in accelerating the bridging process and strengthening the relationship between international Islamic financial markets and thereby expand the investment and trade relations between the Middle East, West Asia and North Africa with East Asia. Situated centrally in the Asian time zone, Malaysia presents itself as a meeting place for those with surplus funds and those who seek to raise funds from any part of the world.

The MIFC initiatives aims to position Malaysia as the Islamic financial hub through five focus areas:

i.	Sukuk Origination
	A platform for government agencies, multinational corporations and multilateral development banks and financial institutions across the world to originate sukuk out of Malaysia. Sukuk (plural of sakk) or Islamic bonds is the most popular component in Islamic Finance among Muslim and non-Muslim consumers alike.
	Sukuk refers to trust certificates or participation securities that grant investors a share of the asset including the cash flow and risks that commensurate from such ownership. Similar to financial bonds in the conventional financial industry, sukuk are proof of ownership title and are utilised by financial institutions to raise cash.
ii.	Islamic Fund and Wealth Management
	A destination for fund managers to establish Islamic fund management operations in Malaysia with a wide range of world class capital market and treasury instruments.
	Islamic fund and wealth management is the professional management of Shariah-compliant securities and assets based on Islamic principles to achieve set financial goals. The scope of activity involves financial analysis, asset and securities selection, investment planning and ongoing monitoring of investment funds. Both individuals and institutions may become Islamic wealth and fund managers through the provision of related services.
iii.	International Islamic Banking
	A centre for financial institutions to establish Islamic banking operations in Malaysia to conduct foreign currency business.
iv.	International Takaful
	A centre for financial institutions to establish takaful (Islamic insurance) operations in Malaysia to conduct foreign currency business.
	Takaful is a concept whereby a group of participants mutually guarantee each other against loss or damage. Each participant fulfils his or her obligation by contributing a certain amount of donation (tabarru) into a fund, which is managed by a third party – the takaful operator.
v.	Human Capital Developement
	A centre of excellence and thought leadership in education, training, consultancy and research in Islamic finance to supply talent for the Islamic finance industry globally.

Major incentives introduced under the MIFC initiative include:

i.	Issuance of International Islamic Banking (IIB) licences under the Islamic Banking Act 1983 to qualified foreign and Malaysian financial institutions to conduct the full range of Islamic banking business with residents and non-residents in international currencies either as a subsidiary or a branch. The entity will enjoy full income tax exemption for ten years up to year of assessment 2016 under the Income Tax Act 1967.
ii.	Issuancther as a subsidiary or a branch. The entity will enjoy similar income te of International Takaful Operator (ITO) licences to qualified foreign and Malaysian financial institutions to conduct full range of takaful business with non-residents and residents in international currencies, eiax exemption as the IIB entity
iii.	Islamic fund management companies (IFMC) are allowed to invest all their Shariah funds abroad. The entity will enjoy tax exemption on all fees for managing Islamic funds for foreign and Malaysian investors up to year of assessment 2016 under the Income Tax Act 1967.
iv.	Up to 100% foreign equity ownership is allowed for IIB, ITO and IFMC.
v.	Tax deduction on expenses incurred in the issuance of Islamic securities approved by the Securities Commission until year of assessment 2015.
vi.	Stamp duty exemption on instruments used to issue sukuk in any currency until year of assessment 2015.
vii.	Tax exemption and withholding tax exemption on interest or profits received by non-resident investors from investment in Islamic securities issued in any currency, other than convertible loan stock, approved by the Securities Commission.

Islamic financial services are also available in the Labuan International Business and Financial Centre (Labuan IBFC).

The Good, Bad and Ugly of Capitalism

By JOE NOCERA

Published: March 16, 2012

On Wednesday, Howard Schultz, the chairman and chief executive of Starbucks, will take the podium at his company’s annual meeting and talk about the importance of morality in business.

Joe Nocera

Yes, morality. I don’t know that he’ll use that exact word. But there can be little doubt that in recent years, especially, Schultz has been practicing a kind of moral capitalism. Profitability is important, he believes, but so is treating customers, employees and coffee growers fairly. Recently, Schultz has defined Starbucks’s mission even more broadly, creating programs that have nothing at all to do with selling coffee but are aimed at helping the country recover from the Great Recession.

In the speech, Schultz plans to make a direct link between Starbucks’s record profits and this larger societal role the company has embraced. He will make the case that companies that earn the country’s trust will ultimately be rewarded with a higher stock price. “The value of your company is driven by your company’s values,” he plans to say.

I bring up Schultz and Starbucks because this week we saw a different kind of American capitalism on display — the “rip your eyeballs out” capitalism of Goldman Sachs. In the corporate equivalent of the shot heard round the world, Greg Smith, a former Goldman executive, wrote an Op-Ed article in The Times as he was walking out the door in which he described a corporate culture that values only one thing: making as much money as possible, by whatever means necessary. According to Smith, Goldman views clients as pigeons to be plucked rather than customers to be valued. Goldman traders vie to see how much profit they can make at the expense of their clients, even if it means selling them products that are sure to “blow up” eventually. “It makes me ill how callously people talk about ripping their clients off,” Smith wrote.

In the wake of Smith’s article, plenty of people raced to Goldman’s defense. Michael Bloomberg, New York’s billionaire mayor, whose company sells Goldman expensive computer terminals, went to Goldman Sachs’s headquarters in a show of support. The editors of his eponymous firm published an editorial that mercilessly mocked Smith. They and others pointed out that Goldman clients are big boys who can take care of themselves. Even some clients agreed. “You better not turn your back on them,” one Goldman customer told The Financial Times. Yet, he added, “They are also highly competent.”

But there’s a reason Smith’s article has struck such a chord. It is the same reason that Goldman Sachs, despite having come through the financial crisis largely unscathed, has become the target of such astonishing venom, described as a vampire squid and the like. The reason is that the kind of amoral, eat-what-you-kill capitalism that Goldman represents is one that most Americans instinctively find repugnant. It confirms the suspicions many people have that Wall Street has become a place where sleazy practices are the norm, and where generating profits in ways that are detrimental to society is the ticket to a successful career and a multimillion-dollar bonus.

Goldman bundled terrible subprime mortgages that helped bring about the financial crisis. Smelling trouble, it unloaded its worst mortgage bonds by cramming them down the throats of its clients. It secretly allowed a short-seller, John Paulson, to pick some especially toxic mortgage bonds that were bundled and sold to Goldman clients — with Paulson profiting by taking the “short” side of the trade. Just recently, Goldman had to admit that one of its investment bankers had acted as a merger adviser to the El Paso Corporation while holding stock in Kinder Morgan, which was trying to acquire El Paso. It would be hard to imagine a more blatant conflict — yet no one at Goldman bothered to tell El Paso.

These practices may not be illegal, but can you really say they represent the values that we want to see on Wall Street or in our corporations? I can’t.

And Goldman shouldn’t either. What has been amazing is that, despite three years of nonstop criticism — including Congressional hearings and settlements with the government — Goldman has not changed one iota. That is another reason Smith’s article resonated. It confirmed that suspicion as well. Goldman’s response to every controversy these past three years has been to bury them in a blizzard of public relations. And this has been its response to the Smith article, releasing, for instance, a companywide e-mail from Lloyd Blankfein, its chief executive, insisting that Goldman does, too, care about clients. Consistently, Goldman’s attitude has been: This, too, shall pass.

So far, though, it hasn’t. And maybe, just maybe, it won’t. Maybe the time has come for Blankfein to watch what Howard Schultz is doing at Starbucks. Sometimes, the best way to do well really is to do good.

Famous quotations on Banking

See what famous people had to say :

PRESIDENTS

If the American people ever allow private banks to control the issue of their  currency, first by inflation, then by deflation, the banks…will deprive the people of  all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. – Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)

“I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson

… The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating. -Thomas Jefferson

The Government should create, issue, and circulate all the currency and  credits needed to satisfy the spending power of the Government and the buying power of  consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity. -Abraham  Lincoln

Issue of currency should be lodged with the government and be protected from domination by Wall Street. We are opposed to…provisions [which] would place our currency and credit system in private hands. – Theodore Roosevelt

Despite these warnings, Woodrow Wilson signed the 1913 Federal Reserve Act. A few years later he wrote: I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of  credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most  completely controlled and dominated Governments in the civilized world no longer a  Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men. -Woodrow  Wilson

Years later, reflecting on the major banks’ control in Washington, President Franklin Roosevelt paid this indirect praise to his distant predecessor President Andrew Jackson, who had “killed” the 2nd Bank of the US (an earlier type of the Federal Reserve System). After Jackson’s administration the bankers’ influence was gradually restored and increased, culminating in the passage of the Federal Reserve Act of 1913. Roosevelt knew this history.

The real truth of the matter is,as you and I know, that a financial
element in the large centers has owned the government ever since
the days of Andrew Jackson… -Franklin D. Roosevelt 
(in a letter to Colonel House, dated November 21, 1933)

POLITICIANS

When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” – Napoleon Bonaparte, Emperor of France, 1815

“The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots and the bankers went anew to grab the riches. I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it to systematically corrupt civilization.” Otto von Bismark (1815-1898), German Chancellor, after the Lincoln assassination

“Money plays the largest part in determining the course of history.” Karl Marx writing in the Communist Manifesto (1848).

“That this House considers that the continued issue of all the means of exchange – be they coin, bank-notes or credit, largely passed on by cheques – by private firms as an interest-bearing debt against the public should cease forthwith; that the Sovereign power and duty of issuing money in all forms should be returned to the Crown, then to be put into circulation free of all debt and interest obligations…” Captain Henry Kerby MP, in an Early Day Motion tabled in 1964.

“Banks lend by creating credit. They create the means of payment out of nothing. ” Ralph M Hawtry, former Secretary to the Treasury.
“… our whole monetary system is dishonest, as it is debt-based… We did not vote for it. It grew upon us gradually but markedly since 1971 when the commodity-based system was abandoned.” The Earl of Caithness, in a speech to the House of Lords, 1997.

BANKERS

“The bank hath benefit of interest on all moneys which it creates out of nothing.” William Paterson, founder of the Bank of England in 1694, then a privately owned bank

“Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” The Rothschild brothers of London writing to associates in New York, 1863.

“I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people.” Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924.

“The banks do create money. They have been doing it for a long time, but they didn’t realise it, and they did not admit it. Very few did. You will find it in all sorts of documents, financial textbooks, etc. But in the intervening years, and we must be perfectly frank about these things, there has been a development of thought, until today I doubt very much whether you would get many prominent bankers to attempt to deny that banks create it.” H W White, Chairman of the Associated Banks of New Zealand, to the New Zealand Monetary Commission, 1955.

OTHER FAMOUS AND IMPORTANT PEOPLES

“Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal – that there is no human relation between master and slave.” Leo Tolstoy, Russian writer.

“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company.

“The modern banking system manufactures money out of nothing. The process is, perhaps, the most astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint and un-mint the modern ledger-entry currency.” Major L L B Angus.

“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.” John Kenneth Galbraith (1908- ), former professor of economics at Harvard, writing in ‘Money: Whence it came, where it went’ (1975).

As Nicolas Trist – secretary to President Andrew Jackson – said about the incredibly powerful privately owned Second Bank of the United States, “Independently of its misdeeds, the mere power, — the bare existence of such a power, — is a thing irreconcilable with the nature and spirit of our institutions.” (Schlesinger, The Age of Jackson, p.102)