The Fed's Dominance Over The Banking Industry In 1 Striking Chart
An image included in a new Keefe, Bruyette & Woods report shows just how much the Financial Crisis and its regulatory aftermath has impacted the largest U.S. financial institutions. The image below demonstrates the 20 largest U.S. financial institutions in 2006 compared to the 20 largest in 2015.
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“As shown, not only are banks larger than prior to the crisis, many more large institutions are now classified and regulated as banks, resulting in much higher capital levels throughout the financial sector,” analyst Federick Cannon explained.
The graphs show that Citigroup Inc (NYSE: C) is the only one of the “Big Four” U.S. banks that has less total assets than it did prior to the Financial Crisis. Despite all the rhetoric about “Too Big To Fail,” Bank of America Corp (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) have both grown since 2006, and Wells Fargo & Co (NYSE: WFC) has more than tripled in size.
Another striking change since the Financial Crisis is the massive expansion of the Federal Reserve’s balance sheet, which is now nearly twice the size of the largest public bank’s balance sheet.
Finally, a number of the largest publicly-traded financial institutions in 2006 were classified as non-banks, such as Morgan Stanley (NYSE: MS), Federal National Mortgage Assctn Fnni Me (OTC: FNMA) and Goldman Sachs Group Inc (NYSE: GS). The majority of these institutions are now classified as or owned by banks or the federal government.
Disclosure: The author is long BAC.
Image Credit: Public Domain
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