TBTF Banks Are Taking Over As Number Of U.S. Banks Falls To All-Time Record Low

The too big to fail banks were in the headlines every single day and our politicians promised to fix the problem.  But instead of fixing it, the too big to fail banks are now 37 percent larger and our economy is more dependent on them than ever before.  And in their endless greed for even larger paychecks, they have become insanely reckless with all of our money.
Mark my words – there is going to be a derivatives crisis.  When it happens, we are going to see some of these too big to fail banks actually fail.
At that point, there will be absolutely no hope for the U.S. economy.
We willingly allowed the too big to fail banks to become the core of our economic system, and now we are all going to pay the price.

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From The Economic Collapse Blog:

The too big to fail banks have a larger share of the U.S. banking industry than they have ever had before.  So if having banks that were too big to fail was a “problem” back in 2008, what is it today?  As you will read about below, the total number of banks in the United States has fallen to a brand new all-time record low and that means that the health of the too big to fail banks is now more critical to our economy than ever.  In 1985, there were more than 18,000 banks in the United States.  Today, there are only 6,891 left, and that number continues to drop every single year.  That means that more than 10,000 U.S. banks have gone out of existence since 1985.  Meanwhile, the too big to fail banks just keep on getting even bigger.  In fact, the six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years.  If even one of those banks collapses, it would be absolutely crippling to the U.S. economy.  If several of them were to collapse at the same time, it could potentially plunge us into an economic depression unlike anything that this nation has ever seen before.

Incredibly, there were actually more banks in existence back during the days of the Great Depression than there is today.  According to the Wall Street Journal, the federal government has been keeping track of the number of banks since 1934 and this year is the very first time that the number has fallen below 7,000…

The number of federally insured institutions nationwide shrank to 6,891 in the third quarter after this summer falling below 7,000 for the first time since federal regulators began keeping track in 1934, according to the Federal Deposit Insurance Corp.

And the number of active bank branches all across America is falling too.  In fact, according to the FDIC the total number of bank branches in the United States fell by 3.2 percent between the end of 2009 and June 30th of this year.

Unfortunately, the closing of bank branches appears to be accelerating.  The number of bank branches in the U.S. declined by 390 during the third quarter of 2013 alone, and it is being projected that the number of bank branches in the U.S. could fall by as much as 40 percent over the next decade.

Can you guess where most of the bank branches are being closed?

If you guessed “poor neighborhoods” you would be correct.

According to Bloomberg, an astounding 93 percent of all bank branch closings since late 2008 have been in neighborhoods where incomes are below the national median household income…

Banks have shut 1,826 branches since late 2008, and 93 percent of closings were in postal codes where the household income is below the national median, according to census and federal banking data compiled by Bloomberg.

It turns out that opening up checking accounts and running ATM machines for poor people just isn’t that profitable.  The executives at these big banks are very open about the fact that they “love affluent customers“, and there is never a shortage of bank branches in wealthy neighborhoods.  But in many poor neighborhoods it is a very different story

About 10 million U.S. households lack bank accounts, according to a study released in September by the Federal Deposit Insurance Corp. An additional 24 million are “underbanked,” using check-cashing services and other storefront businesses for financial transactions. The Bronx in New York City is the nation’s second most underbanked large county—behind Hidalgo County in Texas—with 48 percent of households either not having an account or relying on alternative financial providers, according to a report by the Corporation for Enterprise Development, an advocacy organization for lower-​income Americans.

And if you are waiting for a whole bunch of new banks to start up to serve these poor neighborhoods, you can just forget about it.  Because of a whole host of new rules and regulations that have been put on the backs of small banks over the past several years, it has become nearly impossible to start up a new bank in the United States.  In fact, only one new bank has been started in the United States in the last three years.

So the number of banks is going to continue to decline.  1,400 smaller banks have quietly disappeared from the U.S. banking industry over the past five years alone.  We are witnessing a consolidation of the banking industry in America that is absolutely unprecedented.

Just consider the following statistics.  These numbers come from a recent CNN article

-The assets of the six largest banks in the United States have grown by 37 percent over the past five years.

-The U.S. banking system has 14.4 trillion dollars in total assets.  The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.

-Approximately 1,400 smaller banks have disappeared over the past five years.

-JPMorgan Chase is roughly the size of the entire British economy.

-The four largest banks have more than a million employees combined.

-The five largest banks account for 42 percent of all loans in the United States.

-Bank of America accounts for about a third of all business loans all by itself.

-Wells Fargo accounts for about one quarter of all mortgage loans all by itself.

-About 12 percent of all cash in the United States is held in the vaults of JPMorgan Chase.

As you can see, without those banks we do not have a financial system.

Our entire economy is based on debt, and if those banks were to disappear the flow of credit would dry up almost completely.  Without those banks, we would rapidly enter an economic depression unlike anything that the United States has seen before.

It is kind of like a patient that has such an advanced case of cancer that if you try to kill the cancer you will inevitably also kill the patient.  That is essentially what our relationship with these big banks is like at this point.

Unfortunately, since the last financial crisis the too big to fail banks have become even more reckless.  Right now, four of the too big to fail banks each have total exposure to derivatives that is well in excess of 40 TRILLION dollars.

Keep in mind that U.S. GDP for the entire year of 2012 was just 15.7 trillion dollars and the U.S. national debt is just 17 trillion dollars.

So when you are talking about four banks that each have more than 40 trillion dollars of exposure to derivatives you are talking about an amount of money that is almost incomprehensible.

Posted below are the figures for the four banks that I am talking about.  I have written about this in the past, but in this article I have included the very latest updated numbers from the U.S. government.  I think that you will agree that these numbers are absolutely staggering…

JPMorgan Chase

Total Assets: $1,947,794,000,000 (nearly 1.95 trillion dollars)

Total Exposure To Derivatives: $71,289,673,000,000 (more than 71 trillion dollars)

Citibank

Total Assets: $1,319,359,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $60,398,289,000,000 (more than 60 trillion dollars)

Bank Of America

Total Assets: $1,429,737,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $42,670,269,000,000 (more than 42 trillion dollars)

Goldman Sachs

Total Assets: $113,064,000,000 (just a shade over 113 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $43,135,021,000,000 (more than 43 trillion dollars)

Please don’t just gloss over those huge numbers.

Let them sink in for a moment.

Goldman Sachs has total assets worth approximately 113 billion dollars (billion with a little “b”), but they have more than 43 TRILLON dollars of total exposure to derivatives.

That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.

Most Americans do not understand that Wall Street has been transformed into the largest casino in the history of the world.  The big banks are being incredibly reckless with our money, and if they fail it will bring down the entire economy.

The biggest chunk of these derivatives contracts that Wall Street banks are gambling on is made up of interest rate derivatives.  According to the Bank for International Settlements, the global financial system has a total of 441 TRILLION dollars worth of exposure to interest rate derivatives.

When that Ponzi scheme finally comes crumbling down, there won’t be enough money on the entire planet to fix it.

We had our warning back in 2008.

The too big to fail banks were in the headlines every single day and our politicians promised to fix the problem.

But instead of fixing it, the too big to fail banks are now 37 percent larger and our economy is more dependent on them than ever before.

And in their endless greed for even larger paychecks, they have become insanely reckless with all of our money.

Mark my words – there is going to be a derivatives crisis.

When it happens, we are going to see some of these too big to fail banks actually fail.

At that point, there will be absolutely no hope for the U.S. economy.

We willingly allowed the too big to fail banks to become the core of our economic system, and now we are all going to pay the price.

 

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Comments

  1. “Without the big 5 banks we don’t have a financial system.”  Snyder probably owns more Gold and Silver than I do.  It’s none of my business I don’t care.  The point is that when the collapse happens Snyder is going to be his own bank.  ”MIKE’S BANK” or “MICHAEL”S” what ever.  What do you need to put banks in poor neighborhoods for?  They don’t have any money.  What so that they can borrow some?  Snyder goes on to show the balance sheets of the big 5.  JP Morgan has over 1 trillion bucks as they state publicly.  The guy standing behind it your one and only uncle David is worth trillions of dollars.  Maybe more. There’s two or three sets of books for all of these shysters.  The only ones that are going to get sheared are the sheep. 

  2. I’ve known for over 3.6 years now that the Derivatives Market will be the downfall of this economy and when the interest rates start to climb up, then watch out, because we are in for it. Keep Stacking

  3. As big as our U.S. big banks are, they don’t even crack the top ten world rankings.  JPM comes in 12th, followed by BofA at 18th,  Wells is 22nd.  That’s it for the top 50.  So, TBTF is obviously a lie. 

  4. Break them up, we would still have a banking system with less risk in one spot.

  5. Someone asked Willie Sutton, the famous bank robber, why he robbed banks
    He said ‘Cuz’ that’s were the money is’
    When big banks were asked why they didn’t have branches in poor neighhoods, they said  ” cuz’ that’s not where the money is’
     
     

  6. Let me ask a question?  I have been steady stacking, and have accumlated almost 4K ounces of Ag.  Do you ever wonder if it is going to pay off?  How long can the Fed keep printing until the shtf?  Don’t get me wrong, I love myself some Ag.  It gets kind of addicting.  I don’t want to be the story where some guy passes away & they find a lot of Ag and Au in the attic w/o ever getting to utilize it.  Well, this is my first time ever commenting.  I read Silverdoctors numerous times throughout the day & night.  I often skip the arcticles & read just the comments.
     
     
     

    • @Yahweh,

      God, I hope that I have the opportunity to leave my stack to my family.  That means that the S didn’t HTF in my lifetime.  So I kept on working and kept on stacking and protected my family even after I passed.

      Interesting avatar name Yahweh. Are you connected with the Identity movement or British Isrealism?

    • Hawk  sometimes I worry that I will live long enough to see the investment in my stack ‘pay off’  In reality it’s another asset allocation and that might have a ‘use by’ date but in reflection, life goes on.  Life has a habit of intruding on stackers and non-stackers alike.  99% of our time is spent living life and doing what we do in our daily affairs.  Silver is an insurance policy.  But unlike most insurance in a time of crisis, it will probably no be there when we need it. The insurance firms, like the bankers, will probably find some excuse via force majuere to avoid paying off on claims if the SHTF.  Tuck in the silver, knowing it will retain much of its value. If you are buying now, at $20 an ounce, your stack will not evaporate like some bank deposits or insurance policies that could fail via bail-ins or currency collapses.
       Silver Money is real, banknotes are not , to paraphrase Pat Fields.

  7. This shows how the Fed really is.
    LOL

  8. cool cartoons Yahweh

  9. Excerpt 1: “they have become insanely reckless with all of our money.”

    Banknotes are not money.

    Excerpt 2: “there is going to be a derivatives crisis”

    There already is, which is what ‘ZIRP’ and ‘QE’ measures are all about. The interest rate derivatives will cease to exist if vast quantities of banknotes are destroyed, negating all the accruing interest owing and related related to them.

    Excerpt 3: “if having banks that were too big to fail was a “problem” back in 2008, what is it today?”

    The number and size of banks is immaterial. What banks do, by exclusively lending credit, is the problem. In fact, whether actual money or banknote credit is used, by making Loan the only form of conveying credit in the production process, banks destroy economies. The greatest bulk of credit ought to be through Real Bill Clearing for discount income rather than Loan Interest.

  10. “-Bank of America accounts for about a third of all business loans all by itself.”
    “Total Exposure To Derivatives: $42,670,269,000,000 (more than 42 trillion dollars)”
    I had heard a few years ago that BofA would be the first large bank to fail. With business loans as their majority interests, Obamacare could create a mass exit of existance of small businesses. Which in turn would create a mass default in loans, which would cause a bank failure, that could create a “THE” SHTF event.
     
    Ranger, you might be right, 2 years from now will be after the midterm elections and just so happens to be when the Admistration has decided to delay the small business mandates to offer insurance.  So it is a lose lose situation.  Small businesses go out of business or they create part time jobs out of full time employees to avoid offering insurance.  Which is where, we the taxpayer get to foot the bill.
     
    @UglyDog They might not be in the top ten, but those 4 banks account for almost half of the worlds interest derivatives.  Thats a top ten of their own.
     
     

  11. PS  the banks will start reducing their lending next year, in earnest, to accumulate deposits that need the Dodd Frank and Basel III requirements while avoiding the sanctions against lending to weak clients.    Their collateral is crap in many cases, there is no gold in the vaults, the income streams will be crippled by the implementationof the Volker rule
    The personal and business borrowers weaken more and more as months go by. My clients and bankers are stating clearly that they are hurting.   Example.  A client needs $3,000,000 to pay off their bank loans. Why?  The bank is being forced to replenish their capital to the tune of $16 million. 
    Their targets? Small business clients  who appear to be soft targets, easy to push around. These businesses are not unique in this but they almost universally are unable to cough up the hundreds of thousands or millions in called loans to save the bank predatory from ripping them off.
    These bankers are foreclosing on businessees, stealing their assets to refill bank the coffers.  This was not commonplace in the past but these vultures are hurgry, not waiting for the business to die. They are killing businesses by this means.   Friends of mine in the banking business who used to do $50,000,000 in loans are now struggling to get 20% of that volume, losing their jobs due to poor production. Their employers don’t care, not realizing they are killing their loan production machines. The bosses will die off too.

    Business loan volumes are off as much as 50% in certain venues, particularly the small business field.  2014 will be an even greater disaster to the small business venues, reducing jobs in this country and others. That is a rolling disaster in my opinion, hurting this country even more. 

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