Citigroup Inc. and JPMorgan Chase & Co. are hoarding cash as if another crisis were on the way.

Citigroup has almost doubled its cash, to $244.2 billion, in the year since the securities firm Lehman Brothers Holdings Inc. filed for bankruptcy, the biggest such stockpile of any U.S. banking company.

The lender, which last year came so close to a funding shortfall that it had to get a $45 billion government infusion, is under pressure from the Treasury Department and regulators to keep more money on hand for emergencies, even as markets improve.

The caution may help restore confidence in the financial system, but it offers little comfort to shareholders, who can expect returns to shrink as banks put money into liquid investments that yield one-twelfth the interest rates of loans.

"It's a smart longer-term move, but it will take down the rates of returns these companies can generate," said Eric Hovde, the chief executive of Hovde Capital Advisors LLC, a Washington hedge fund with $1 billion of financial and real estate investments. "If you start to see more economic stabilization, then liquidity levels would start dropping, but they'll never go back to the insane level they were pre-crisis."

Regulators say banks got too aggressive in the years leading up to last year's credit market seizure, operating with too little equity capital and putting too much money into illiquid investments such as loans and complex, hard-to-trade securities and derivatives.

A lack of funds "can contribute as much or more to the firm's failure as insufficient capital," the Treasury Department said in a Sept. 3 statement of "core principles" on financial regulation. Lehman, which declared bankruptcy on Sept. 15, 2008, after losing access to its funding, had said in a statement five days earlier that it had a "strong capital base."

The four largest U.S. banks by assets — Bank of America Corp., JPMorgan Chase, Citigroup and Wells Fargo & Co. — have increased their combined liquidity by 67%, to $1.53 trillion, as of Sept. 30 from $914.2 billion in June 2008, before Lehman's collapse, according to the companies' third-quarter reports. The amount is 21% of the banks' assets, up from 15%.

Liquidity includes cash, deposits at other banks and debt securities that can be pledged as collateral in exchange for overnight borrowings from the Federal Reserve or other banks.

Citigroup's total liquidity on Sept. 30 was $450.3 billion, or 24% of assets, up from 16% in June 2008. The shift was reflected in Citi's third-quarter results, as interest income fell by $1.4 billion from a year earlier and pushed the company to an operating loss of $750 million.

JPMorgan Chase CEO Jamie Dimon said last week at a securities industry conference that "the chance of Armageddon is over." That view hasn't stopped him from tripling JPMorgan Chase's pile of cash and debt securities that can be used as collateral over the past year.

The company's total liquidity was $453.6 billion at Sept. 30, including $80.7 billion in cash and deposits at other banks.

The larger figure is 22% of its total assets, up from 9.5% before Lehman's bankruptcy.

Bank of America has increased its holdings of cash, time deposits and debt securities to $422.6 billion, or 19% of overall assets, from 17% in June 2008, according to company reports.

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