'Too-big' banks get bigger still
WASHINGTON — Just before the financial crisis hit, Wells Fargo & Co. had $609 billion in assets. Now it has $1.4 trillion. Bank of America Corp. had $1.7 trillion in assets. That's up to $2.1 trillion.
The assets of JPMorgan Chase & Co., the nation's biggest bank, have ballooned to $2.4 trillion from $1.8 trillion.
Ending the problem of so-called too-big-to-fail firms was a rallying cry for politicians and regulators after the unprecedented bailouts in fall 2008. The issue was the major impetus for enacting the sweeping Dodd-Frank regulatory overhaul two years later.
President Obama and key financial regulators said the law's reforms, many still unfinished, will prevent another financial industry rescue by reducing the chances that a mega-bank would collapse and by giving the government powers to handle one if it did.
Yet five years since the crisis, several of the nation's largest banks are even larger. Total assets at the nation's 10 biggest banking companies shot up 28 percent to $11.3 trillion as of the end of June, federal regulators said.
There is rare agreement among many Democrats and Republicans in Washington that those banks still are too big to fail, leaving the economy even more at risk.
“These banks are too big to manage, and they're too big to regulate,” said Sen. Sherrod Brown, D-Ohio. “Too-big-to-fail hasn't been fixed.”
Agreement on identifying the problem, however, doesn't mean both sides of the aisle agree on a solution. Arguments rage in Washington on an issue known simply as TBTF.
Like many Democrats, Brown believes that the new rules, including federal authority to seize and dismantle firms if their failure threatened to trigger a crisis, don't go far enough.
They want laws that could force mega-banks to downsize. If they're not too big, the argument goes, then they're not too big to fail.
Most Republicans agree the problem has gotten worse. But they don't blame the banks.
The culprit, they say, is the financial reform law, one of Obama's signature first-term accomplishments.
“Rather than ending too-big-to-fail, Dodd-Frank codified it and wrote it into law,” said Rep. Patrick McHenry, R-N.C.
The government's power to seize firms teetering near collapse could result in their being rescued instead of shut down, in effect enshrining bailouts as an option for federal officials, McHenry said.
Wall Street and investors know the public safety net is still there, and that has fueled the growth of those banks since the crisis, McHenry said.
The solution, many House Republicans said, is to get rid of that authority and make clear that any financial firm — no matter its size — would be forced into bankruptcy if in danger of failing.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Operating loss widens at Highmark parent
- Stocks fall for 2nd straight day as corporate earnings concerns deepen
- Pennsylvania grid operator might delay power auction for new rules
- Consol Energy files for IPO of coal spin-off
- Anchor Hocking parent EveryWare files for Chapter 11
- Summer blend to boost gasoline prices over next month
- Pa. Gas & Electric agrees to $6.8 million settlement of polar vortex claims
- Conventional gas, oil drillers seek rules differing from shale industry in Pennsylvania
- Stocks of Pittsburgh-area companies set record in March
- Pittsburgh region’s unemployment rate stays steady
- U.S. Steel considers temporary shutdown of Minn. plant