Too Bigger To Fail

We were told during the financial crisis that the consolidation of the banks presented a situation where they had to be saved. Now we have the resultant outcome, that the banks which managed to survive the crisis are even bigger.

The crisis may be turning out very well for many of the behemoths that dominate U.S. finance. A series of federally arranged mergers safely landed troubled banks on the decks of more stable firms. And it allowed the survivors to emerge from the turmoil with strengthened market positions, giving them even greater control over consumer lending and more potential to profit.

J.P. Morgan Chase, an amalgam of some of Wall Street's most storied institutions, now holds more than $1 of every $10 on deposit in this country. So does Bank of America, scarred by its acquisition of Merrill Lynch and partly government-owned as a result of the crisis, as does Wells Fargo, the biggest West Coast bank. Those three banks, plus government-rescued and -owned Citigroup, now issue one of every two mortgages and about two of every three credit cards, federal data show.

A year after the near-collapse of the financial system last September, the federal response has redefined how Americans get mortgages, student loans and other kinds of credit and has made a national spectacle of executive pay. But no consequence of the crisis alarms top regulators more than having banks that were already too big to fail grow even larger and more interconnected.

FDIC head Sheila Bair is quoted in this article at least sounding concerned about this. Nobody else seems to be.

The American consumer will pay the biggest price for this, by the way. Not just in terms of having to bail out the few remaining banks if things get rough, but in higher fees and charges that accompany less competition.

I'm out, I'm going to a credit union from now on.