Thursday, December 24, 2009

TBTF Banks are Even Bigger

Here's a graph of the bank deposits at the 4 biggest banks, the TBTF banks. There is a steady progression of consolidation in assets in the American banking sector from 1998-2007 through mergers & acquisitions. Might have been good for the FED to slow down anytime in the '90s and early 2000s. This is not entirely positive. The year of 2008 starts the credit crisis years, shotgun marriages and growth of assets for the TBTF banks that creates an even more top heavy bank sector in America. This is not going to end well. We are just delaying the inevitable big bank break up that will need to happen for us all to move forward, financially speaking.

Yes nearly 4 out of every 10 dollars in American banks are held in 4 corporations. This includes the sickest bank of them all, Citigroup, which in the fall of 2008 was considered on death watch and was too weak to 'acquire' Wachovia. Yes, 12 months ago Citi was on death watch even after the TARP injection. What has transpired since then: unemployment jumping to 10%, more foreclosures, higher loan and credit card delinquencies, and a flatlined housing and consumer discretionary sector. Citi is a zombie bank. That's an insult to zombies as zombies usually have no control over their status. Citi knew what was coming. Former CEO Chuck Prince: "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing" (source). Prince knew it was coming. What did he do to protect shareholders? That is a question shareholder advocates should be asking, and a class action lawsuit against him and the board should be coming. One cannot say they did not see it coming when they clearly state that when the music stops it's going to be "complicated".

I need a distraction.

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