Are the megabanks "too big to bail?''
How does the rise of the megabanks play into the country’s attempts to steady its financial banking system?
Perhaps quite a bit according to a new report from Celent, a Boston-based financial research and consulting firm.
In a report called “Too Big to Bail? Bank Concentration in the Developed World,” Celent details the concentration of banking deposits nationwide since the mid-1990s.
In 1995, the top five banks had 11 percent of the country’s deposit share. That grew to 29 percent by 2005 and today, the five institutions have nearly 40 percent of deposits.
Such concentration leads to reduced competition and greater exposure to “systemic risk,” the report concludes.
Celent researchers cited concern that banks will become not just too big to fail but too big to bail out. They focused on three banks in particular that are at or above the country’s 10 percent limit on domestic deposit market share: Bank of America, JPMorgan Chase (which now includes Washington Mutual) and Wells Fargo (which includes Wachovia).
Florida, long a banking colony, faces the issue of bank concentration even more acutely than the rest of the country. Bank of America, JPMorgan Chase and Wells Fargo alone control roughly 40 percent of the state’s banking deposits.
-- Jeff Harrington, Times Staff Writer