Big 6 Banks Worth 64% of Nation’s GDP…up from 17% in 1995

Monday, January 17, 2011
How big is too big when it comes to banks? Maybe when a mere half dozen institutions are worth more than 60% of the American economy.
The latest financial data from the third quarter of last year shows the assets of the six largest banks—JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley—were worth 64% of the gross domestic product. Fifteen years ago, these banks represented only 17% of GDP.
JPMorgan Chase alone controls 46% of all bank deposits in the U.S. Here is the approximate asset value of each of the Big 6 Banks:
·       JPMorgan Chase--$2 trillion
·       Bank of America--$2 trillion
·       Citigroup--$2 trillion
·       Well Fargo--$1 trillion
·       Goldman Sachs--$880 million
·       Morgan Stanley--$820 million.
Neil Barofsky, the special inspector general put in charge of monitoring the 2008 bailout of Wall Street, wrote in his latest report that the government needs to consider letting too-big-to-fail banks suffer some pain, unless the nation wants to deal with another financial crisis in the future.
In addressing the $20 billion government rescue of Citigroup, Barofsky said that “unless and until institutions like Citigroup can be left to suffer the full consequences of their own folly, the prospect of more bailouts will potentially fuel more bad behavior with potentially disastrous results.”
If the collapse of any of the Big 6 Banks would cause severe damage to the U.S. economy, then the executives of these banks know that if they pursue high-risk, high-profit investments and fail, the government will be there to save them. In the words of economist Eugene Fama, this “is not capitalism. Capitalism says, you perform poorly, you fail.”
-Noel Brinkerhoff, David Wallechinsky
The Bill Daley Problem (by Simon Johnson, Baseline Scenario)
TARP Watchdog Sounds Alarm About “Too Big To Fail” Banks (by Julie Vorman, Center for Public Integrity)


iflyjetzzz 13 years ago
NO! They're not 'worth' 64% of GDP. They have assets, which are marked to fantasy, that total 64% of GDP. They also have a large amount of liabilities; I haven't added them up but I'd wager that it totals more than 50% of GDP. I suggest that the author take an entry level accounting class. I'm no fan of any of these banking institutions and I'm furious about TARP, but it's important that you be factually correct. The issue here is concentration of assets in the hands of very few banking institutions, not that they are 'worth' 64% of GDP. This, in the minds of brain dead in DC, makes these institutions too big to fail. I have always favored letting insolvent institutions fail, including AIG and all other 'too big to fails'. The grave economic consequences would be far less than the moral hazard that has been introduced by bailing out insolvent companies. We will be living with the damage of this for decades to come. Now everyone wants their handout.

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