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Too Big To Fail Banks Are Taking Over As Number Of U.S. Banks Falls To Record Low

Tyler Durden's picture


Submitted by Michael Snyder of The Economic Collapse blog,

The too big to fail banks have a larger share of the U.S. banking industry than they have ever had before.  So if having banks that were too big to fail was a "problem" back in 2008, what is it today?

As you will read about below, the total number of banks in the United States has fallen to a brand new all-time record low and that means that the health of the too big to fail banks is now more critical to our economy than ever.  In 1985, there were more than 18,000 banks in the United States.  Today, there are only 6,891 left, and that number continues to drop every single year.  That means that more than 10,000 U.S. banks have gone out of existence since 1985. 

Meanwhile, the too big to fail banks just keep on getting even bigger.  In fact, the six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.  If even one of those banks collapses, it would be absolutely crippling to the U.S. economy.  If several of them were to collapse at the same time, it could potentially plunge us into an economic depression unlike anything that this nation has ever seen before.

Incredibly, there were actually more banks in existence back during the days of the Great Depression than there is today.  According to the Wall Street Journal, the federal government has been keeping track of the number of banks since 1934 and this year is the very first time that the number has fallen below 7,000...

The number of federally insured institutions nationwide shrank to 6,891 in the third quarter after this summer falling below 7,000 for the first time since federal regulators began keeping track in 1934, according to the Federal Deposit Insurance Corp.

And the number of active bank branches all across America is falling too.  In fact, according to the FDIC the total number of bank branches in the United States fell by 3.2 percent between the end of 2009 and June 30th of this year.

Unfortunately, the closing of bank branches appears to be accelerating.  The number of bank branches in the U.S. declined by 390 during the third quarter of 2013 alone, and it is being projected that the number of bank branches in the U.S. could fall by as much as 40 percent over the next decade.

Can you guess where most of the bank branches are being closed?

If you guessed "poor neighborhoods" you would be correct.

According to Bloomberg, an astounding 93 percent of all bank branch closings since late 2008 have been in neighborhoods where incomes are below the national median household income...

Banks have shut 1,826 branches since late 2008, and 93 percent of closings were in postal codes where the household income is below the national median, according to census and federal banking data compiled by Bloomberg.

It turns out that opening up checking accounts and running ATM machines for poor people just isn't that profitable.  The executives at these big banks are very open about the fact that they "love affluent customers", and there is never a shortage of bank branches in wealthy neighborhoods.  But in many poor neighborhoods it is a very different story...

About 10 million U.S. households lack bank accounts, according to a study released in September by the Federal Deposit Insurance Corp. An additional 24 million are “underbanked,” using check-cashing services and other storefront businesses for financial transactions. The Bronx in New York City is the nation’s second most underbanked large county—behind Hidalgo County in Texas—with 48 percent of households either not having an account or relying on alternative financial providers, according to a report by the Corporation for Enterprise Development, an advocacy organization for lower-?income Americans.

And if you are waiting for a whole bunch of new banks to start up to serve these poor neighborhoods, you can just forget about it.  Because of a whole host of new rules and regulations that have been put on the backs of small banks over the past several years, it has become nearly impossible to start up a new bank in the United States.  In fact, only one new bank has been started in the United States in the last three years.

So the number of banks is going to continue to decline.  1,400 smaller banks have quietly disappeared from the U.S. banking industry over the past five years alone.  We are witnessing a consolidation of the banking industry in America that is absolutely unprecedented.

Just consider the following statistics.  These numbers come from a recent CNN article...

-The assets of the six largest banks in the United States have grown by 37 percent over the past five years.

-The U.S. banking system has 14.4 trillion dollars in total assets.  The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.

-Approximately 1,400 smaller banks have disappeared over the past five years.

-JPMorgan Chase is roughly the size of the entire British economy.

-The four largest banks have more than a million employees combined.

-The five largest banks account for 42 percent of all loans in the United States.

-Bank of America accounts for about a third of all business loans all by itself.

-Wells Fargo accounts for about one quarter of all mortgage loans all by itself.

-About 12 percent of all cash in the United States is held in the vaults of JPMorgan Chase.

As you can see, without those banks we do not have a financial system.

Our entire economy is based on debt, and if those banks were to disappear the flow of credit would dry up almost completely.  Without those banks, we would rapidly enter an economic depression unlike anything that the United States has seen before.

It is kind of like a patient that has such an advanced case of cancer that if you try to kill the cancer you will inevitably also kill the patient.  That is essentially what our relationship with these big banks is like at this point.

Unfortunately, since the last financial crisis the too big to fail banks have become even more reckless.  Right now, four of the too big to fail banks each have total exposure to derivatives that is well in excess of 40 TRILLION dollars.

Keep in mind that U.S. GDP for the entire year of 2012 was just 15.7 trillion dollars and the U.S. national debt is just 17 trillion dollars.

So when you are talking about four banks that each have more than 40 trillion dollars of exposure to derivatives you are talking about an amount of money that is almost incomprehensible.

Posted below are the figures for the four banks that I am talking about.  I have written about this in the past, but in this article I have included the very latest updated numbers from the U.S. government.  I think that you will agree that these numbers are absolutely staggering…

JPMorgan Chase

Total Assets: $1,947,794,000,000 (nearly 1.95 trillion dollars)

Total Exposure To Derivatives: $71,289,673,000,000 (more than 71 trillion dollars)


Total Assets: $1,319,359,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $60,398,289,000,000 (more than 60 trillion dollars)

Bank Of America

Total Assets: $1,429,737,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $42,670,269,000,000 (more than 42 trillion dollars)

Goldman Sachs

Total Assets: $113,064,000,000 (just a shade over 113 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $43,135,021,000,000 (more than 43 trillion dollars)

Please don't just gloss over those huge numbers.

Let them sink in for a moment.

Goldman Sachs has total assets worth approximately 113 billion dollars (billion with a little "b"), but they have more than 43 TRILLON dollars of total exposure to derivatives.

That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.

Most Americans do not understand that Wall Street has been transformed into the largest casino in the history of the world.  The big banks are being incredibly reckless with our money, and if they fail it will bring down the entire economy.

The biggest chunk of these derivatives contracts that Wall Street banks are gambling on is made up of interest rate derivatives.  According to the Bank for International Settlements, the global financial system has a total of 441 TRILLION dollars worth of exposure to interest rate derivatives.

When that Ponzi scheme finally comes crumbling down, there won't be enough money on the entire planet to fix it.

We had our warning back in 2008.

The too big to fail banks were in the headlines every single day and our politicians promised to fix the problem.

But instead of fixing it, the too big to fail banks are now 37 percent larger and our economy is more dependent on them than ever before.

And in their endless greed for even larger paychecks, they have become insanely reckless with all of our money.

Mark my words - there is going to be a derivatives crisis.

When it happens, we are going to see some of these too big to fail banks actually fail.

At that point, there will be absolutely no hope for the U.S. economy.

We willingly allowed the too big to fail banks to become the core of our economic system, and now we are all going to pay the price.


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Wed, 12/04/2013 - 22:50 | Link to Comment LetThemEatRand
LetThemEatRand's picture

New World Order.  Nah, it's just a coincidence.  Unintended consequences, black swans, etc.

Wed, 12/04/2013 - 23:16 | Link to Comment TeamDepends
TeamDepends's picture

It's a really big casino, but the buffet kinda sucks.

Wed, 12/04/2013 - 23:24 | Link to Comment LetThemEatRand
LetThemEatRand's picture

At least they still offer free drinks for those with EBT cards.

Thu, 12/05/2013 - 00:27 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

I like free bitcoins from instead.

Thu, 12/05/2013 - 00:02 | Link to Comment wee-weed up
wee-weed up's picture



And so Obama further enables his puppet-masters...

Come on... Is anyone really surprised?

Wed, 12/04/2013 - 22:50 | Link to Comment Xibalba
Xibalba's picture

Why does the POTUS summon the 5 heads of the Beast for a sit down?  Demon, Blankfuck, etc....

Or is it the other way around?  ... 

Thu, 12/05/2013 - 09:16 | Link to Comment Clashfan
Clashfan's picture

They all need cameras stuck in their faces and REAL questions asked of them. This guy Luke is my new hero, and this is my new favorite video. We need more of this everyday.

Thu, 12/05/2013 - 10:47 | Link to Comment moneybots
moneybots's picture

"They all need cameras stuck in their faces and REAL questions asked of them."


Those don't come until after the crash.

Thu, 12/05/2013 - 11:04 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

Truthing? We need more of that crap?

Wed, 12/04/2013 - 22:50 | Link to Comment ebworthen
ebworthen's picture

Of course, the larger the TBTF banks are - and the fewer small banks there are - the more likely the TBTF banks will get bailed out ALL OVER AGAIN.

Win/Win; FED has their back.

Wed, 12/04/2013 - 22:55 | Link to Comment LetThemEatRand
LetThemEatRand's picture

In the final episode of this scripted story, Jamie Dimon puts 3 billion hollow points in the trunk of his Bentley and saves himself and Lloyd from certain derivative death.  Lloyd drives away with a big smile on his face.

Wed, 12/04/2013 - 22:57 | Link to Comment FieldingMellish
FieldingMellish's picture

No more bail outs. Its bail ins now. Guess who pays?

Wed, 12/04/2013 - 23:14 | Link to Comment NoDebt
NoDebt's picture

I'm beginnning to rethink the entire concept of a "bail-out."  It can't be done again in such an obvious, public spectacle like before.  You would literally see riots break out.  Next time around it has to be under-the-covers.  That can only be done by bringing banks and the federal government into such a relationship that they are effectively government entities with private ownership.  Yes, I'm talking about the Fannie/Freddie model, but on the QT, not by explicit law.  

A merging of balance sheets, effectively, between the Fed, the big banks and the federal government (perhaps through Treasury).

Banks are WELL versed in off-balance-sheet transactions already, that much we know.  The Fed can play that game as well (Mainden Lane).  The federal government can do anything it wants, of course, especially in times of crisis.

Debt and capital are already nearly indistinguishable.  Therefore, debt as capital could be implied ownership.  I don't think you need to get much closer than that to finish the circle when the next "crisis" hits.  

What does this mean?  Don't know except that there won't be any explicit "bail-out" passing through congress, nobody to point the finger at when it happens.  Banks, the Fed and the federal government effectively all part of one entity with no clear boundaries in ownership or control, all done at the political level, of course, through the executive branch.

If I'm right about any of this, it's already on the drawing board or has already begun to be implemented.

Thu, 12/05/2013 - 11:02 | Link to Comment moneybots
moneybots's picture

"I'm beginnning to rethink the entire concept of a "bail-out."  It can't be done again in such an obvious, public spectacle like before."




It has already been mentioned in congress that the tax payers don't want to bail out the banks again.  That is the set up for what is coming.  The tax payers didn't want the first bail out but congress ignored what the people wanted.  SO WHY IS CONGRESS BEING SO CONSIDERATE THIS TIME? 

First round was the tax payers, second round is the depositors.  Coming and going.  Hank Paulson will still have his hundreds of millions, while others get reamed twice.

Wed, 12/04/2013 - 23:02 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Apparently Too Big To Fail eventually swamps Too Small To Exist.

<Can you say unfair competition?>

Thu, 12/05/2013 - 06:10 | Link to Comment PT
PT's picture

Ummm, umm, 'coz some animals are more competitive than others.  Yeah, yeah, that's it!  And that's why he's richer than you.

Wed, 12/04/2013 - 23:02 | Link to Comment NIHILIST CIPHER

Derivatives will be the cause of the plane hitting the mountain.........we are so fucked. Just remember who designed and created that giant turd in the punchbowl. Show no mercy!

Wed, 12/04/2013 - 23:05 | Link to Comment fonzannoon
fonzannoon's picture

Derivatives only matter in (somewhat) free markets when the big boys are competing against each other. They have been informed that their choice is either play together or commit mass suicide. Care to guess what they picked?

Wed, 12/04/2013 - 23:21 | Link to Comment NIHILIST CIPHER

fonz      You are leaving out the fact that they are crashing the system on purpose. Making bad loans and then packaging them up into toxic waste bundles for the derivatives market can only be seen as an intentional act. Big boys or no big boys you will still be eating out of a dumpster. 

Wed, 12/04/2013 - 23:24 | Link to Comment fonzannoon
fonzannoon's picture

Well I can't argue with your last sentence. That may be certain. But I don't think they are crashing the system. 

Wed, 12/04/2013 - 23:05 | Link to Comment Seasmoke
Seasmoke's picture

 'I want to see you smile again - the day the banks collapse - zee hordes of vigilantees - the day the banks collapse on us...

Wed, 12/04/2013 - 23:23 | Link to Comment madbraz
madbraz's picture

The article focuses on instilling fear should one of these banks fail, instead of joy.

There is no impossible complexity in one or all of these banks failing - what is missing is balls to go against any of them.

Half of all derivatives bets of these banks are against one another - close all 5 of them and half the issue goes away.

They really just have to take the commercial bank out of the parent, force them to break it apart. Once depositor money is out and corporate loans are out, the garbage that remains can fend for itself without FDIC and NY FED support.

Easiest way would be to force the NY FED to stop the financial crime of leveraging this financial rape by ending the practice of providing access to unlimited collateral for free and turning a blind eye to the criminal activity that is rehypothecation.

How's that for an idea - outlaw rehypothecation of collateral. Collect CUSIPs of each security pledged, match against a database of all CUSIPs in existence that can be collaterized - and enforce the illegality of posting colateral of a CUSIP that has already been pledged.

Force gamblers to prove ownership of collateral, instead of aiding and abetting them in schemes to repledge the same collateral many times over.

Criminals overlooking criminals and deciding on what constitutes criminal behavior.

Wed, 12/04/2013 - 23:52 | Link to Comment JR
JR's picture

Amen! Let ‘er rip! Along with the bankers’ current transfer of wealth program – Obamacare - and their puppet clown who's shoving it down our throats.

Our real problem is paying off our bills with money that has less value. As for the future of the US economy with Chairman Yellen at the helm, it’s grim, says Ron Paul – “which provides all the more reason to end our system of central economic planning by getting rid of the Federal Reserve entirely.

As for the pain:

“Ripping off the bandage may hurt some in the short run, but in the long term everyone will be better off. Anyway, most of this pain will be borne by the politicians, big banks, and other special interests who profit from the current system. “Ending this current system of crony capitalism and moving to sound money and free markets is the only way to return to economic prosperity and a vibrant middle class."

Thu, 12/05/2013 - 00:09 | Link to Comment madbraz
madbraz's picture

There are no real men in power to bring about this change. They don't give a rats a$$ and they have perfected a system of HFT, corrupted data (ISM, PMI, ADP, payrolls, jobs number) and primary dealer-NY Fed action that will not stop. They met the Europeans some time in 2011 and told them how to do it - talk, give it all to banks and lie about data. Then they talked to Abe. They probably talk every day, hard to keep the euro at such wonderful levels, as well as the Yen. Hard to keep the US and UK yield curve this steep without coordination. Hard to keep the US stock market without a 10%+ correction for a year and a half...

This has become one gigantic turd of a country.

Thu, 12/05/2013 - 00:05 | Link to Comment NIHILIST CIPHER

madbraz        Good points, these criminals have trashed banking oversight. The sheep will beg for the new and improved criminal banking cartel model. 

Wed, 12/04/2013 - 23:36 | Link to Comment JR
JR's picture

Congress, if loyal to the American people and their freedom, would have shut down the government before it would have funded Obamacare socialism; likewise, had it done its duty to the American people in 1913, it would have shut down the government rather than allow passage of the Federal Reserve Act.

“Shut down” merely means refusal to pass specific legislation whether it be to establish the Fed or to fund Obamacare. If the opponents choose to shut down the government rather than agree to this refusal, then: SHUT DOWN THE GOVERNMENT!

Senator William J. Stone (D-Missouri) provided examples of threats and power of the big banks in his testimony during the 1913 congressional debate prior to passage of the Federal Reserve Act:

"The great banks for years have sought to have and control agents in the Treasury to serve their purposes. Let me quote from this World article, ‘Just as soon as Mr. McAdoo came to  Washington, a woman whom the National City Bank had installed in the Treasury Department to get advance information on the condition of banks, and other matters of interest to the big Wall Street group, was removed. Immediately the Secretary and the Assistant Secretary, John Skelton Williams, were criticized severely by the agents of the Wall Street group…’

"I myself have known more than one occasion when bankers refused credit to men who opposed their political views and purposes. When Senator Aldrich and others were going around the country exploiting this scheme, the big banks of New York and Chicago were engaged in raising a munificent fund to bolster up the Aldrich propaganda. I have been told by bankers of my own state that contributions to this exploitation fund had been demanded of them and that they had contributed because they were afraid of being blacklisted or boycotted. There are bankers of this country who are enemies of the public welfare. In the past, a few great banks have followed policies and projects that have paralyzed the industrial energies of the country to perpetuate their tremendous power over the financial and business industries of America."

In a damning survey of the Federal Reserve System’s first fifteen years in the “North American Review” of May 1929, H. Parker Willis, First Secretary of the Federal Reserve Board from 1914 to 1920, wrote: “Since the inauguration of the Federal Reserve Act we have suffered one of the most serious financial depressions and revolutions ever known in history, that of 1920-21.  We have seen our agriculture pass through a long period of suffering and even revolution, during which 1,000,000 farmers left their farms, due to difficulties with the price of land and the odd status of credit conditions.  We have suffered the most extensive era of bank failures ever known to the country. Forty-five hundred (4,500) banks have closed their doors since the Reserve System began functioning.”

According to Bill  Ganzel of the Ganzel Group: “As the economic depression deepened in the early 30s, and as farmers had less and less money to spend in town, banks began to fail at alarming rates. During the 20s, there was an average of 70 banks failing each year nationally. After the crash during the first 10 months of 1930, 744 banks failed – 10 times as many. In all, 9,000 banks failed during the decade of the 30s. By 1933, depositors saw $140 billion disappear through bank failures.”

Thu, 12/05/2013 - 11:24 | Link to Comment Ident 7777 economy
Ident 7777 economy's picture

-1 Regurgitation of ... who originally wrote that stuff? Can't you give it to us in your own words?

Wed, 12/04/2013 - 23:34 | Link to Comment virgilcaine
virgilcaine's picture

Shouldn't there be some kind of Congressional inquiry?  Sherman antirust violations etc?.... chirping sounds.

Wed, 12/04/2013 - 23:37 | Link to Comment venturen
venturen's picture

Obama You can keep your small bank...wait...what...the website doesn't work and the banks have been crushed by the Wall Street Mafia...Don't look behind the green curtain...all is not good.

Wed, 12/04/2013 - 23:40 | Link to Comment venturen
venturen's picture

This is know as FED intended consequences. 

Wed, 12/04/2013 - 23:40 | Link to Comment venturen
venturen's picture

Who wants a friendly local face...when you can have a CEO banker making $30 million/yr and a call center in India?

Wed, 12/04/2013 - 23:47 | Link to Comment starman
starman's picture

Let's hope they go instinct like the dynos!

Wed, 12/04/2013 - 23:57 | Link to Comment virgilcaine
virgilcaine's picture

Flyover Country has been decimated,  anywhere outside LA , SF or NYC, small banks are vital to those communities. With Zirp and Housing doa there's not much of a future in Banking.

Thu, 12/05/2013 - 00:04 | Link to Comment sunny
sunny's picture

I have not used a bank in 38 years.  Credit Unions are not banks.  I love our local credit union, they have served our family well.


Thu, 12/05/2013 - 02:39 | Link to Comment magnetic_silver...
magnetic_silver_ideas's picture

your shit don't stank, but the Fed money you bring to the bank

loaned out into existance at compound interest, mathmatically impossible to make all accounts whole....

it's like saying, I didn't kill the people, I just kept making sure the clips were full

Thu, 12/05/2013 - 00:16 | Link to Comment virgilcaine
virgilcaine's picture

No help from tbtf there either. My guess it's impossible to be profitable in a zirp world. Banks need interest income and Benny is starving them out.


Since 2007, the total number of credit unions has dropped 14%. In 2007, there were 8,332 credit unions. Today, there are only 7,165, a decline of 1,167 credit unions. That average loss of 233 credit unions per year, a little less than one per day.

Key Fact: Every month, the industry sheds about 20 credit unions.

Thu, 12/05/2013 - 00:57 | Link to Comment JR
JR's picture

The push by the TBTFs is to make America’s financial system their exclusive monopoly – even to the point of closing down the credit unions by taxing them to death.

For example, a credit union newsletter I receive wrote just this quarter that the big banks, “with the current climate in Washington…see this as the perfect opportunity to ‘sneak in’” taxation of credit unions. Never mind that “credit unions hold just 6% of all U.S. financial assets, while banks hold the rest." Or that "each of the nation’s four largest banking entities individually hold more in assets than all U.S. credit unions combined.”

Or that nearly a third of all U.S. banks themselves are exempt from corporate income taxes because of their classification as Subchapter S corporations. And that these same lobbyists who want to tax credit unions have been trying for years to expand their eligibility for Subchapter S status effectively eliminating many of the taxes these banks pay.

The newsletter states: “Bank lobbyists are even implying a tax on credit union earnings could help balance the federal budget. They also claim credit unions have an unfair advantage and suggest that taxing credit unions would ‘level the playing field.’”

The truth is that “if the federal tax exemption were scrapped and all credit unions taxed on their earnings, it would only generate enough revenue to cover around .06% or less of the federal deficitequal to funding the government for roughly one hour."

And, last but not least, credit unions are operated for the benefit and savings of their members; the TBTFs are operated solely for the benefit and profits of the international bankers.

Thu, 12/05/2013 - 00:27 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Paging Mr Sherman, Mr Sherman.


Thu, 12/05/2013 - 00:39 | Link to Comment MedicalQuack
MedicalQuack's picture

In case you missed each household up to 24 Euros forgiving $2 billion in debt..

And about the banks and inequality, it all starts there...President Obama talks today about inequality well we bailed out the banks and now we want to see the math models..and want accountability, lots of links in this one.  When in the world will people finally own up to the fact people with a lot of money and power write the models and code that take out money and deny access...

Nothing will change until the change the code running on the closed as far as lip service...

Thu, 12/05/2013 - 02:22 | Link to Comment magnetic_silver...
magnetic_silver_ideas's picture

Money as debt, compound interest. The snake eating its own tail.  Poetic, beautiful.

Thu, 12/05/2013 - 08:07 | Link to Comment Disenchanted
Thu, 12/05/2013 - 02:59 | Link to Comment dunce
dunce's picture

Even worse, congress is going after credit uniopns for taxes. Credit unions did not cause the meltdown. It may be the one financial group that is not corrupt.

Thu, 12/05/2013 - 03:03 | Link to Comment magnetic_silver...
magnetic_silver_ideas's picture

The sooner the government confiscates everything, the better it will be.

Either peal the band-aid or rip it off, it ends the same.

Thu, 12/05/2013 - 08:13 | Link to Comment fattail
fattail's picture

Branches are closing because foot traffic is down due to online banking an   direct deposit.  Banks are consolidating because of the economic depression, QE, LSAP, and zero interest rates have crippled loan demand and killed margins.   Bring back margins and banks will be chartered again.

Thu, 12/05/2013 - 10:08 | Link to Comment d edwards
d edwards's picture

Monopoly isn't just a board game.


That's what the TBTF banks are-monopolies-in league with the gov't. Not good, as we saw in '08.

Thu, 12/05/2013 - 10:11 | Link to Comment q99x2
q99x2's picture

Nothing like consolidation of an industry to bring about its demise.

Thu, 12/05/2013 - 16:55 | Link to Comment Gankfest
Gankfest's picture

To big to fail seems like they're failing quite nicely...

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