When Banks are Bigger Than Too Big To fail

People don’t think anything about banks taking over other banks, but what happens when the cycle runs its course and there are only two banks left? Who do you turn to then if you've overdrawn an account at both banks or missed a loan payment at both? What if both decide they want to charge a set fee for mortgages and that fee should be 10 percent. What happens when both banks decide that all checking accounts should be charged $10 a month?

After the banks continue their cycle of takeovers and mergers, it could very well be that only two are left, leaving consumers with little or no choice in where they put their money or get their loans. In the economic recession of last decade we saw huge banks like Wachovia, Merrill Lynch and Bear Sterns be acquired by other banks to create gigantic banks.

The American people were told that the banks were too big to fail and that’s the reason they had no choice but to bail them out, but today the banks are even bigger. What’s a term for even bigger than too big to fail? I guess we’ll have to come up with one. 

From June 2007 to March 2009 – the time where we saw the biggest dips in the economy because of the housing market crisis – the banks that didn’t fail made out like bandits. Three banks – JP Morgan Chase, Wells Fargo and Bank of America – all had huge growth in their combined assets. Wells Fargo saw an increase of 43 percent, Chase saw an increase of 51 percent and Bank of America increased a whopping 138 percent.

According to the Washington Post, JP Morgan Chase now holds more than $1 of every $10 deposited in this country. So does Bank of America and so does Wells Fargo, the biggest West Coast bank. 

Later this week, I'll tell you about how the board game Monopoly was created to show people the dangers of just this sort of thing.

Real Estate Mike is host of the syndicated radio show, “Let’s Talk Real Estate with Mike Andrews.” He is a published author, real estate expert, entrepreneur and investment advisor. Follow me on Twitter - Twitter.com/RealEstateMikeA.