The Scariest Chart You May Ever See

Like Frankenstein, too-big-to-fail banks didn't pop out of nowhere. We created them -- or, more specifically, financial lobbyists and our purported representatives in Washington did (to read about how this happened, read this article).

But aside from the sheer size of the nation's largest banks, one of the most startling facts is how quickly they consolidated power over the nation's financial assets. The chart below depicts just that. As you can see, starting in 1994 (the same year that Congress removed restrictions on interstate banking), the market share of big banks began an aggressive ascent that continues today, going from roughly 35% of industry assets to more than 80% at the end of last year. 

Lest there be any doubt, this is what the too-big-to-fail debate is all about. Do we want only a handful of lenders -- in this case, JPMorgan Chase (NYSE: JPM  ) , Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , and Wells Fargo (NYSE: WFC  ) -- to control the narrows, if you will, of American finance? Is that a threat to our savings? Our economy? Or even our financial freedom? Chime in on these questions in the comment section below.


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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.

  • Report this Comment On May 03, 2013, at 9:59 AM, Nate9 wrote:

    How many banks exist with >$10bn in assets? You need that fact in the chart to prove your point.

    Importantly, as banking is a regulated industry (and becoming more so - not arguing for or against), the cost to operate just the basic requirements means one must have scale to make money. There is a Catch-22 in that we might need the regulation, but its natural consequence is scale assuming it is a free enterprise system.

    If you want to argue a point, please state clearly what is your solution. Many of understand the problem.

  • Report this Comment On May 03, 2013, at 11:08 AM, HeyPacketMan wrote:

    The solution is what we did to the Bell System in 1984.

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