Chart of the Day : U.S. Banking Assets Concentration From 1970 to 2010

The "Too Big to Fail" logic is understood when we look at the asset concentration in the U.S. Banking System in 1970 and 2010.

In my opinion, it still does not justify the bailout of financial institutions and I am concerned about the eventual path taken by the financial system, which can collapse with the collapse of one or two large financial institutions. 

The first chart below gives the assets as a percentage of total industry assets for the banking system in 1970

Banking System assets as a percentage of total industry assets for top banks in 1970

The second chart below gives the assets as a percentage of total industry assets for the banking system in 2010

Banking System assets as a percentage of total industry assets for top banks in 2010

Very clearly, a smaller number of banks hold most of the industry assets in 2010. One can argue that this is the natural course of any industry. However, as mentioned earlier, it is a cause of concern when the collapse of one bank can potentially trigger the collapse of the entire financial system. 

For now, the too big to fail will remain too big to fail and any crisis will result in more bailouts. 

Anonymous –   – (May 18, 2012 at 5:09 PM)  

Economics Fanatic,

I thank you for providing this excellent, relevant, & timely information. I suggest that you send a link to this article to ZeroHedge.com (ZH) b/c Tyler Durden likes this sort of content, which would stimulate considerable on ZH.

-- Paul D. Bain
paulbain@pobox.com

Post a Comment

  © Blogger template Shush by Ourblogtemplates.com 2009

Back to TOP