The five largest domestic banks hold $8.5 trillion of assets, or 56% of the nation’s GDP, and are bigger now than before the financial crisis.
The assets of the banks—JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Goldman Sachs Group Inc. (GS)—represented 43% of U.S. output in 2007, according to Bloomberg, citing sources at the Federal Reserve.
“The ‘Big Five’ today are about twice as large as they were a decade ago relative to the economy,” the news service says, “sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did in 2007 with the Fed-assisted rescue of Bear Stearns Cos. by JPMorgan and in 2008 with Citigroup and Bank of America after the Lehman Brothers bankruptcy, the largest in U.S. history.”
The news has a political angle, in that it “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.”
As weaker firms collapsed or were acquired, a handful of financial giants emerged from the crisis. Since then, Bloomberg adds, JPMorgan, Goldman Sachs and Wells Fargo have continued to grow internally and through acquisitions from European banks, reeling from government austerity measures related to the rising cost of public debt in Greece, Ireland, Italy, Portugal and Spain.
“The industry’s evolution defies the president’s January 2010 call to ‘prevent the further consolidation of our financial system,’” the article says. “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.’”