[OPE] Henry C. K. Liu on US "superbanks"

JP Morgan Chase is reportedly holding more than $1 of every $10 on deposit
in the US. The four biggest super banks (JP Morgan Chase, Bank of America,
Wells Fargo and Citibank) now issue one of every two mortgages and about two
of every three credit cards in the US. Since the financial crisis, these
four super banks are each allowed to hold more than 10% of the nation's
deposits, having been exempted from a longstanding rule barring such market
dominance. In several metropolitan regions, these new super banks are now
permitted to take market share beyond what the Department of Justice's
anti-trust guidelines previously allowed. The American banking system is now
one of a handful of large global trading companies pretending to be banks,
taking huge profits from high-risk proprietary trades with government-backed
money, instead of one of a network of small conservative local institutions
serving their domicile communities merely as intermediaries of money through
local deposits for nominal fees. Sheila C Bair, chairman of the Federal
Deposit Insurance Corp, described the TBTF problem as such, "It fed the
crisis, and it has gotten worse because of the crisis." The US financial
system is looking more like a financial trust of a small number of super
banks operating with deliberate moral hazard backed by ever-ready government
bailouts, while consumers are increasingly faced with fewer choices for
financial services from competitive providers.
http://www.atimes.com/atimes/Global_Economy/KK10Dj04.html

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Received on Thu Nov 19 23:28:53 2009