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Business and Labor

Failure to Regulate as Super-sized Banks Grow Larger

Supersize Banks (Analysis) Even as investigation into criminal activity at super-sized banks continues to uncover more wrong doing, the trend for both larger size and greater industry concentration continues (see chart). Since 1999, when Congress repealed the provisions limiting bank activities and mergers by the Glass-Steagall Act of 1933, the number of banks with more than $100 billion in assets – super-sized banks, has increased from 6 to 19. This trend for larger and riskier bank size continues unabated after the recession of 2008-9, which exposed the potential for real economic damage that these super-sized banks can cause.

In Dec. 2012, the market share of commercial bank assets for super-sized banks is an astounding 61%, up from 55% in Dec. 2007 (the beginning of the “Great Recession”) and 26% in Dec. 1999. Politicians who promised “action” to control Wall Street have not delivered any meaningful change to this industry.

Labor and working families are rightfully worried by these trends. Through no fault of their own, they are suffering into a sixth year after the start of the 2008-9 recession. Since government proves unwilling or incapable to control a trend that many analysts believe is responsible for the “Great Recession” – larger and riskier banks, worry by workers about when another financial crisis will occur is widespread.

Given no effective government action to control bank size, it is incumbent upon labor and working families to patronize community banks in an effort to show their concern and unhappiness with super-sized banks. Credit unions are an especially safe and sound financial institution that should receive business from workers. Faced with a political system that is corrupted by large campaign contributions from super-sized banks, effective government action is unlikely anytime soon.

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