According to a number of studies from the NY Federal Reserve, the largest banks in the U.S. continue to benefit from the perception that they are lower risk than smaller banks, giving them the ability to borrow at a lower rate. This perception of reduced lending risk with banks such as Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM) seems to come from the idea that were another catastrophic collapse to occur, these institutions are still considered "too big to fail," and would receive another government bailout.
In this segment of last week's Where the Money Is, Motley Fool banking analysts Matt Koppenheffer and David Hanson look at the studies, and discuss what the idea of "too big to fail" means today.
The biggest change you never saw coming
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.
David Hanson owns shares of JPMorgan Chase. Matt Koppenheffer owns shares of Bank of America and JPMorgan Chase. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.