Too Big to Fail? You Have No Idea

Saying that a bank is too big to fail has become a cliche.

What does it mean? How big are we talkin'?

When most analysts and investors discuss the concept of too big to fail, they're referring to the quantity of balance sheet assets. Take Citigroup (NYSE: C  ) , ostensibly the nation's third largest bank by assets. Its balance sheet boasts a staggering $1.9 trillion in assets -- yes, that's trillion with a "t." Bank of America (NYSE: BAC  ) , the nation's second largest lender, reports $2.2 trillion in assets. And JPMorgan Chase (NYSE: JPM  ) , the biggest of them all, has nearly $2.4 trillion in balance sheet assets.

That's pretty massive, eh?

Well, what if I were to tell you that this is only the start of it? What if these banks grew to control, say, $10 trillion in assets? Or $20 trillion? Would that concern you?

I hope not, because that indeed is already the case. As the following infographic illustrates, once the nation's largest banks account for assets under management and custody, their size swells more than tenfold.

Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.


Read/Post Comments (6) | Recommend This Article (11)

Comments from our Foolish Readers

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  • Report this Comment On May 03, 2013, at 8:31 AM, mastedon2 wrote:

    When most analysts and investors discuss the concept of too big to fail, they're referring to the quantity of balance sheet assets..

    No.

    we are referring to the fact that the government will pillage taxpayer dollars to keep a fraudulent business practice in effect, to perpetuate it.

  • Report this Comment On May 03, 2013, at 1:10 PM, XXF wrote:

    AUM are not commingled with bank funds. To do so is already illegal. If one of these institutions fail the AUM continue to sit in an account with the exact same holdings and the exact same owners that they had previously. This seems like another TMF attempt to misrepresent the banking industry. Also, everyone knows what State Street is, stop trying to create an evil financial specter which is actually just an industry which facilitates efficient allocation of capital.

  • Report this Comment On May 05, 2013, at 1:53 AM, AGrasKzoo wrote:

    The Creature of Jekyll Island is about to eat them all.

  • Report this Comment On May 05, 2013, at 4:37 AM, skepticalsenior wrote:

    This information is shocking and envaluable! No wonder they control congress, Justice and maybe the fate of the world's economies.

    My question is: Can they and do they manipulate the markets, at will, so the banks and their clients under management always have a winning edge against us little guys? What would stop them? And to think I used to grind my teeth about front running! I believe we are only allowed to glean the crumbs while shouldering incredible risk with our paltry life's savings. The day may come when we wake up and find ourselves holding the bag...or has that happened more than once already.

  • Report this Comment On May 06, 2013, at 9:26 AM, BMFPitt wrote:

    Unabridged list of institutions that are too big to fail:

  • Report this Comment On May 09, 2013, at 5:32 PM, collectingfool wrote:

    I work for the "biggest bank". Based on the business practices I see it's not going to take much for it to need a bailout. Things were on shaky ground before but once Mellon took over it just slid downhill from there.

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