How Safe Is Today's Banking Sector?

We're more than four years past the Wall Street meltdown.

The big banks, Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , JPMorgan Chase (NYSE: JPM  ) , and Wells Fargo (NYSE: WFC  ) , are in much better shape now than they were then. Capital is higher. Asset quality is better. Lending standards are tighter. Lessons have been learned and business practices changed.

But in some ways, today's banking system might be far more dangerous than it was before the financial crisis.

Why? Concentration.

Risks are now concentrated in a handful of megabanks. Come the next financial crisis, that could mean even greater risks to the financial system when just one bank screws up.

Last week I sat down with Mohamed El-Erian, CEO of bond giant PIMCO. I asked him how he feels about the health of today's financial system. Here's what he had to say.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2159541, ~/Articles/ArticleHandler.aspx, 5/26/2015 12:09:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!