This page has been archived and commenting is disabled.

Giant Banks Now 30% Bigger than When Dodd-Frank Financial “Reform” Law Was Passed

George Washington's picture




 

For years, many high-level economists and financial experts have said that – unless we break up the giant banks – our economy will never recover, real reform will be blocked, and democracy and the rule of law will be corrupted.

So how did the government respond to the financial crisis which started in 2007?

Let the giant banks get even bigger.

As Bloomberg notes, the five banks that held assets equal to 43% of the US economy in 2007 before the financial crisis and the bank bailout now control assets that equal 56% of the US economy:

Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the credit crisis.

 

Five banks – JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to the Federal Reserve.

 

Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did during the 2008 crunch.

 

“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.

That specter is eroding faith in Obama’s pledge that taxpayer-funded bailouts are a thing of the past. It is also exposing him to criticism from Federal Reserve officials, Republicans and Occupy Wall Street supporters, who see the concentration of bank power as a threat to economic stability.

 

***

 

The industry’s evolution defies the president’s January 2010 call to “prevent the further consolidation of our financial system.” Embracing new limits on banks’ trading operations, Obama said then that taxpayers wouldn’t be well “served by a financial system that comprises just a few massive firms.”

 

Simon Johnson, a former chief economist of the International Monetary Fund, blames a “lack of leadership at Treasury and the White House” for the failure to fulfill that promise. “It’d be safer to break them up,” he said.

 

***

 

Regulatory burden could promote further industry consolidation, according to Wilbur Ross, chairman of WL Ross & Co., a private-equity firm.

 

“We think the little tiny banks, the 90-odd percent of banks that are under $1.5 billion in deposits, are pretty much an obsolete phenomenon,” he told Bloomberg Television on March 14. “We think they’ll all have to merge with each other, be acquired by bigger banks or something.”

 

***

 

In 2011, funding costs for banks with more than $10 billion in assets were about one-third less than for the smallest banks, according to the FDIC.

Some presidents of regional Federal Reserve banks have lambasted too big to fail. As Bloomberg notes:

In recent weeks, at least four current Fed presidents — Esther George of Kansas City, Charles Plosser of Philadelphia, Jeffrey Lacker of Richmond and Richard Fisher of Dallas — have voiced similar worries about the risk of a renewed crisis.

But the most powerful Fed bank – the New York Fed – and Bernanke’s Federal Open Market Committee, as well as Tim Geithner’s Treasury Department, have done everything possible to ensure that the the giant banks become too bigger to fail.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 04/17/2012 - 19:20 | 2353027 ebworthen
ebworthen's picture

They added 30% more paper to swiss cheese legislation so we should not be surprised.

No doubt the bank's lawyers and lobbyists put in 500 pages of exceptions and work arounds.

And, the American Sheeple are too stupid not to bank at the big four who took bailouts and used free money from the FED to run commercials and build fancy new branches:

  1. Chase
  2. Bank of America
  3. Citi
  4. Wells Fargo

If you bank with any of these you may as well force your children (grandchildren) to scrub toilets at the county jail for free because there is no difference other than the timeline.

p.s. - Unemployment debit and EBT cards administered by Chase (plenty of fees too).  My retirement account at TIAA-CREF administered by Chase, two brand new branches in town with glittery blue remodels and construction = Chase.  Government is the banks, the banks have become our Government.

Tue, 04/17/2012 - 19:03 | 2352995 aerial view
aerial view's picture

Can't we all just get along and agree on one damn thing:

Don't use the big 5 banks which means not for personal or business savings, checking, investments, credit cards and loans!!! Stay away from them; they are a malignant toxic mutant plague that will steal every last dollar out of the middle class.

Tue, 04/17/2012 - 18:23 | 2352910 krispkritter
krispkritter's picture

And they're holding hearings on where $820K went from one stinking department in this gargantuan bureaucracy because that's WAY more important than anything else. I think the Gov't drops 10 times more than that in the minute it takes O'bisquit to drop a mini-me in a gold-plated WH collection bowl. Quick! Look over there!

Tue, 04/17/2012 - 18:16 | 2352897 navy62802
navy62802's picture

Shocking.

/endsarcasm

Tue, 04/17/2012 - 17:33 | 2352798 ilovefreedom
ilovefreedom's picture

Let's see, the top 5 banks have seen their assets increase, not decrease as you would assume Obama would help implement considering all this, "Rich bad", "Middle class good" rhetoric.

YET, we see here:

http://www.opensecrets.org/pres08/contrib.php?cid=N00009638

Goldman was his #2 contributor in 2008, JPMorgan was #6, Citi was #7, and I'm sure the other 2 were quite high as well.

Sounds like speeches and rhetoric for the middle class and billions of dollars of bailouts for wall street.... as usual.

Tue, 04/17/2012 - 17:54 | 2352843 W10321303
W10321303's picture

This is the third Clinton Administration. The Hypothecator-in-Chief was always pretty clueless, but they must have promised him a really BIG mansion in that fancy neghborhood in Mass. that escapes me right at the moment. And, they will destroy that video of him with the underage cheerleaders.

Tue, 04/17/2012 - 17:25 | 2352777 Catullus
Catullus's picture

Not surprising given that they wrote the bill.  And that it didn't actually regulate anything.  It's just created new regulatory agencies that would regulate things if they ever got around to it.  The Swap Dealer "rules" are a running joke in the energy industry as midstream nat gas transport company wait to see if they have to report their swaps because of JPM's bad behavior.

Tue, 04/17/2012 - 16:58 | 2352690 Arnold Ziffel
Arnold Ziffel's picture

Barry announced this morning he was going to regulate and penalize the evil bank speculators I heard....

I was too busy watching The IODD Couple reruns to pay much attention....

Tue, 04/17/2012 - 16:22 | 2352610 Madcow
Madcow's picture

the TBTF Banks are not lending to small business -  not because they are evil - but becuause they realize that small business is being systematically destroyed by tax and regulatory provisions.  

so enough of this whining about the Gov-Banks not lending to small business because they "should" lend to small business to "get the economy going."  they've got to be profitable somehow - and the only way they can make money now is through consumer lending and via lending to giant public corporations.  "small business" is toast.  They've got no future - and are guaranteed to fail as time goes on - THAT is why the TBTF banks are not lending to small business. 

 

 

Tue, 04/17/2012 - 20:51 | 2353191 QQQBall
QQQBall's picture

they are lending via SBA CRE.... gubbermint takes the most risk of course.  Its a twofer - banks generate loans and helps support CRE market prices.  Big spread between pricing on leased-investment properties versus owner-user Fee Simple deals financed by SBA.

Tue, 04/17/2012 - 17:59 | 2352860 sgt_doom
sgt_doom's picture

"the TBTF Banks are not lending to small business -  not because they are evil - but becuause they realize that small business is being systematically destroyed by tax and regulatory provisions. "

Geez, you're ignorant, truly, truly a member of the Ignoramus Americanus!

Those banksters have been financing those items to hamstring and destroy small business, that which they cannot or don't want to consolidate.

The legislation passed in congress awhile back gives precedence to small business loans only when those businesses already have investments from hedge funds, private equity funds, etc.

Major corporations donate to foundations which work to load small business with greater and greater regs directed at stifling them economically.

 

Tue, 04/17/2012 - 17:23 | 2352761 Doubleguns
Doubleguns's picture

Consumer lending will become extinct with out small business. NO JOBS NO CONSUMER. Madcow your logic is not working.

I did not trash you. Just pointed out your logic flaw.

Tue, 04/17/2012 - 18:03 | 2352870 sgt_doom
sgt_doom's picture

Where did your "retail consciousness" come from?

They don't give a rat's ass about consumer lending or the consumer anything....

Over the past decade, well over 70% of banks' lending was mortgage lending (actually, I think it was over 80%).

The only ones who can now afford all those much cheaper houses being auctioned off in blocks (thanks to the corrupt politicians' architecting that phony "mortgage settlement" among the states attorneys-general) are those same investors/speculators who caused the problems to begin with.

You mean you've never figured out that they who cause the problems, then profit from those problems they purposely caused?

Truly, there is much ignorance here today!

Read a book in the last 20 years?

Tue, 04/17/2012 - 15:59 | 2352548 tony bonn
tony bonn's picture

one of the primary purposes of the financial crash was to engorge the financial terrorist banks....read the wizard of oz for more insights into the banksters money lusts...

Tue, 04/17/2012 - 18:06 | 2352872 sgt_doom
sgt_doom's picture

Thanx, tony bonn, an intelligent comment after some truly Sesame Street-type comments of pure ignorance.

(And who was behind the financing of Sesame Street -- can you say the top private bankster?)

Tue, 04/17/2012 - 15:58 | 2352544 Eric L. Prentis
Eric L. Prentis's picture

At least two of these TBTF banks are insolvent, and hurting the economy. The safest course is to put zombie banks out of business.

Tue, 04/17/2012 - 15:53 | 2352521 NewThor
NewThor's picture

"We are your friends. We will not hurt you."

- the aliens from Mars Attacks

as they rape. pillage. and mass murder.

Tue, 04/17/2012 - 15:44 | 2352498 semperfi
semperfi's picture

one of these days America will re-discover Jefferson - to bad our schools haven't yet.....

"If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered."

-- Thomas Jefferson

 

Tue, 04/17/2012 - 18:48 | 2352952 mp95bravo11208
mp95bravo11208's picture

I think come November we will rediscover most of our Founders once again.  One way or another this nation is about to wake the hell up in a big way.  It will not be to Obama's liking with over 90 million well armed Americans and his now what - 75% disgust rate among fellow soldiers?  Hell in the marines that rate is like 85% held even that high due to some of our patriotic African American brothers in the Corp.  

When it comes to officers, Obama's not liked in the least.  The officer Corp is somewhere close to being 85-90% Republican. 

 

 

Tue, 04/17/2012 - 16:33 | 2352566 LowProfile
LowProfile's picture

 

one of these days America will re-discover Jefferson - to bad our schools haven't yet.....

And which schools are those you speak of?

Oh, GOVERNMENT RUN SCHOOLS?!

Gee, I wonder why those things aren't mentioned...

Tue, 04/17/2012 - 18:10 | 2352879 sgt_doom
sgt_doom's picture

LowProfile, what's your point?

Gov't is owned by Wall Street!

You mean a tea party twit like you wasn't aware of that?

You mean when one of those private military companies (like Blackwater USA or whatever name they go by now), or USIS (now Altergy), or Kroll (now Pearson Gov't Services) does those phony background checks for ALL the gov't agencies, dictating who does and doesn't get hired --- you thought the gov't was really doing all the hiring for all those functions now majority privatized?

You are really that pathetically ignorant?  You really believe the gov't does the hiring for SAIC?  Raytheon?  Booz Allen (now owned by Carlyle Group)?

Ignoramus Americanus?

Tue, 04/17/2012 - 23:29 | 2353560 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

This government, Obama's, is paid for by George Soros.

Tue, 04/17/2012 - 18:39 | 2352931 LowProfile
LowProfile's picture

Wow.

...Straw Man Fallacy much?

And if you're going to ask a man his point, you might want to let him answer it, instead of doing it for him.

But evidently, that's not how you roll.

Tue, 04/17/2012 - 16:49 | 2352672 falak pema
falak pema's picture

church run schools better? What about only private schools for the rich; let the poor eat dirt, if they can't get cake!

Tue, 04/17/2012 - 18:39 | 2352934 LowProfile
LowProfile's picture

Ususally they are.

My point is, theres' TWO THINGS they DON'T TEACH in public schools:

 

1.  CONSTITUTIONAL GOVERNMENT AND THE ARTICLES OF CONFEDERATION

2.  MODERN MONETARY THEORY AND THE PROCESS OF MONEY CREATION

 

...Still want to defend GOVERNMENT ENFORCED EDUCATION?!

Tue, 04/17/2012 - 15:56 | 2352533 Fedaykinx
Fedaykinx's picture

they're too busy branding him a radical racist.  he's my favorite founding father btw, the guy was many things but he saw how this would all end pretty clearly:

“The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.”

“It is incumbent on every generation to pay its own debts as it goes — a principle which if acted on would save one-half the wars of the world.”

“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”

“My reading of history convinces me that most bad government results from too much government.”

“No free man shall ever be debarred the use of arms.”

“The strongest reason for the people to retain the right to keep and bear arms is, at a last resort, to protect themselves against tyranny in government.”

“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.”

“To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.”

Tue, 04/17/2012 - 16:07 | 2352568 LowProfile
LowProfile's picture

Jefferson's greatest failing (and it was huge) was that he failed to live up to his own standards.

Tue, 04/17/2012 - 16:52 | 2352678 falak pema
falak pema's picture

huge, huge, immense, for a man who wrote the declaration of independence, for him not to be picture perfect like the virgin mary; you actually get the impression we were sold the fake object relative to the ICON  we created, he turned out to be mere mortal; a man, not a giant! Oh the disappointment... 

Tue, 04/17/2012 - 18:35 | 2352909 LowProfile
LowProfile's picture

Dude...

Slaves...

And I know, how presumptuous of me to not conveniently ignore the man's failings.

Tue, 04/17/2012 - 23:29 | 2353555 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Slaves were sold by people who created and practiced, just like today, slavery in Africa. By your standard every person who is currently of African descent is a bad person. Are you a racist?

Tue, 04/17/2012 - 16:35 | 2352644 lunaticfringe
lunaticfringe's picture

How so, smiley?

Tue, 04/17/2012 - 18:24 | 2352914 LowProfile
LowProfile's picture

Oh, I dunno...

Slaves...  And the horribly degrading way he wrote about black people...

Not saying his ideas on government weren't pure gold, just saying that he made his personal conduct impossible to defend (and thus a monstrous straw man for the statists to attack).

Tue, 04/17/2012 - 15:44 | 2352489 Jason T
Jason T's picture

i haven't heard anythig about the occupy movement..is that over with?  

Tue, 04/17/2012 - 15:43 | 2352486 Sleepless Knight
Sleepless Knight's picture

Everything the government gets invovled in is totally screwed up. They cant win for losing. You just have to ignore it to keep your sanity. When I get kicked instead of the can, then I will react, but for now I'm just gonna take a break and relax.

Tue, 04/17/2012 - 15:36 | 2352465 Bastiat009
Bastiat009's picture

If you're too big to fail, the last thing you want is to get smaller because that means you would have to work. 

Tue, 04/17/2012 - 15:27 | 2352439 knukles
knukles's picture

Well, the Gubamint didn't just let the big banks get bigger.

They first passed NEW laws to prohibit big banks from getting bigger, having passed laws in the past to forbid big banks from getting bigger....
But haven't enforced any of said laws....

Why haven't they enforced said laws, Knukles?
Pabulum to the voters ("We're on the case, votwe for us.") whilst doing fuck all nothing except ignoring the laws which they passed and are sworn to uphold, in exchange for money.

That's why.
And that's why nothings gonna change.

Get ready for 6 months of Hegelian Dialectic. 
The clowns and small cars are coming to town. 

Tue, 04/17/2012 - 15:22 | 2352424 JW n FL
JW n FL's picture

 

 

The industry’s evolution defies the president’s January 2010 call to “prevent the further consolidation of our financial system.” Embracing new limits on banks’ trading operations, Obama said then that taxpayers wouldn’t be well“served by a financial system that comprises just a few massive firms.”

Simon Johnson, a former chief economist of theInternational Monetary Fund, blames a “lack of leadership at Treasury and the White House” for the failure to fulfill that promise. “It’d be safer to break them up,” he said.

New Safeguards

The Obama administration rejects the criticism, citing new safeguards to head off further turmoil in the banking system. Treasury Secretary Timothy Geithner said in remarks on Feb. 2 the U.S. financial system is “significantly stronger than it was before the crisis.” He credits new regulations, including tougher capital and liquidity requirements that limit risk-taking by the biggest banks, authority to take over failing big institutions and prohibitions on the largest banks acquiring competitors.

The government’s financial system rescue, beginning with the 2008 Troubled Asset Relief Program, angered millions of taxpayers and helped give rise to the Tea Party movement. Banks and bailouts remain unpopular: By a margin of 52 percent to 39 percent, respondents in a February Pew Research Center pollcalled the bailouts “wrong” and 68 percent said banks have a mostly negative impact on the country.

http://www.bloomberg.com/news/2012-04-16/obama-bid-to-end-too-big-to-fail-undercut-as-banks-grow.html

 

http://www.youtube.com/watch?v=8RVzIDlDnLE

 

Tue, 04/17/2012 - 15:15 | 2352391 Scroto Gaggins
Scroto Gaggins's picture

NOTHING short of a full reinstatement of Glass Steagall.  No more funny money, HFT, naked shorting, leveraging, and rein in fractional reserve. 

Tue, 04/17/2012 - 15:47 | 2352503 Reptil
Reptil's picture

Agree. But it's too damn late IMO. The banks have captured government. The bailouts in the USSA or EU-pact cannot be unwound just like that. Or what about the annual 260 Billion in drug money laundering (that we know of (from 2008). No one's going to tell me that suddenly stopped.

Tue, 04/17/2012 - 15:20 | 2352416 battle axe
battle axe's picture

I agree with you, it would be a huge step in the right direction, but then the US Banks will come up with their usual argument, "We can not do that because it will not apply to the foreign banks and they will clean our clocks". Same old Horseshit. 

Tue, 04/17/2012 - 15:47 | 2352510 eatthebanksters
eatthebanksters's picture

My response to that line of reasoning would be,"Yeah, and?"  Who gives a shit, if people want to go offshore and put their money in risky investments, let them.  Let's just make sure at home our economy is not endangered because of this type of thinking.  Pigs get fat, Hogs get slaughtered...

Tue, 04/17/2012 - 14:33 | 2352254 LowProfile
LowProfile's picture

At this rate, the banks will be 100% of the economy by 2040.

Amazing to me that those running The Ponz (r) can't see they're going to kill their host organism.

Tue, 04/17/2012 - 18:13 | 2352887 sgt_doom
sgt_doom's picture

Yes, it was amazing when serial killers eventually go completely and excitably bonkers and kill brazenly with little forethought, as Ted Bundy did in his final killing spree.

But then that's psychopaths, for ya.....

Tue, 04/17/2012 - 15:20 | 2352408 Clowns on Acid
Clowns on Acid's picture

Sandy Weill and Robert Rubin were the first ones off of that ship....a long time ago.

Tue, 04/17/2012 - 15:35 | 2352459 knukles
knukles's picture

Does that mean that the conspiracy theory and new political meme surrounding alien invasions and UFO's has in fact been the truth all along?
Buncha fucking shape shifting alien reptilians.
I'm tellin' ya'
Nobody believes me.
Ya gotta look at them right square in the eyes and meep gackblurpppp fuck        

  help me                                                     plsssth    
xblt fphht              klc   

 mup  fl
                     ahhh  gggggggggggk

Tue, 04/17/2012 - 15:46 | 2352506 LowProfile
LowProfile's picture

lol!

Seriously though, I think that meme was either started (or at least encouraged) as distraction.

Tue, 04/17/2012 - 19:41 | 2353056 knukles
knukles's picture

Within the Parametrics of the Hegelian Dialectic and Bernaysian manipulation, the purpose of all memes is distraction.

To wit; within the last 48 hours where as scientists pronounced generations ago that there was no life on Mars, it's now a "scientific" reality.  Not to mention within the last yaer or so, the UN appointed some lady from Asia as head of the the Earth's Official Greeter's of Alien Beings Office (or whatthefuckever it's called)....
And within the last week, somebody from or supposedly with credibility tied to the DOD made a statement on Ozzie telly that the US already has formal plans for combatting an alien invasion.

It's real. 
(Not the aliens, I'll leave that to you; the meme is alive, weel and part of the landscape/implementation...)

Tue, 04/17/2012 - 14:53 | 2352325 LowProfile
LowProfile's picture

Question is, where exactly do they think they are going to jump ship to?

Mars?

Tue, 04/17/2012 - 17:09 | 2352724 newworldorder
newworldorder's picture

Only those countries that will guarantee their safety for a price and by the size of their military. Russia, China, India and the European Union are prime candidates for this role.

Do NOT follow this link or you will be banned from the site!