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The CEOs who lead our largest banks ought to be spending their time trying to get ahead of the next problem and righting their corporate cultures. If they don't, it may be only a matter of time before Congress breaks them up, argues Editor-at-Large Barbara A. Rehm
July 25 -
Comments by former Citigroup chief executive Sandy Weill reignited the debate over whether to separate commercial banking from investment banking.
July 25
Over the last few months, megabanks have
Against the backdrop of JPMorgan's trading losses, Barclays' attempted manipulation of a benchmark interest rate, and
"Large U.S. banks (greater than $50 billion in total assets) provide $50 billion to $110 billion annually in benefits to companies, consumers, and governments," the Clearing House asserted in a presentation based on its November 2011 review of studies on bank size.
The trade group began preparing the presentation several weeks ago in response to what it believes are misguided calls for the breakup of big banks, a representative of the group said. Its members include companies such as JPMorgan Chase (JPM), Bank of New York Mellon (BNY), Wells Fargo (BFC), Deutshe Bank (DB) and Bank of America (BAC).
A portion of the presentation shows that U.S. banks aren't especially concentrated compared to their peers in the developed world, and that the assets they hold account for a lower percentage of gross domestic product than do large banks in many other jurisdictions.
In the event of financial crises, the Clearing House asserts, megabanks may even help with the cleanup.
"Large banks have the capacity to acquire larger troubled institutions and thereby limit government bailouts," the presentation states.
Beyond downplaying possible risks from the scale of U.S. banks, the slides argue that big banks create and offer more products to consumers, and "are especially important in serving increasingly global U.S. corporations."
"Large banks add value and lend social utility," the Clearing House said.
