What exactly does too-big-to-fail mean?
That's the question I've sought to answer over the last few days, mainly through the use of charts and infographics.
The article here traces the history of too-big-to-fail banks -- how they got to be where they are today. The chart here reveals that the inflection point for the industry was in 1994 -- that is, the same year Congress removed restrictions on interstate banking. And the infographic here shows how much larger many banks are than most people think.
What follows is another chart in this series. This one illustrates the massive accumulation of deposits by the nation's largest 10 largest banks between 1994 and the end of last year.
As you can see, these lenders increased their collective deposit base more than sevenfold, and their market share more than doubled. In 1994, the 10 biggest banks held 17% of the nation's deposits. By 2012, their market share had skyrocketed to 40%.
So what does this mean? It depends on who you ask. But either way, people should probably think long and hard about whether this type of accumulation of our liquid wealth is good for the country -- and particularly after the bank-induced debacle five years ago.
The biggest bank of them all
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