Three Banks to Rule the World
Lee on Nov 06 2008 at 12:36 pm | Filed under: Economics
The winners of the global financial turmoil look to be three American ’superbanks’: JP Morgan Chase, Bank of America and Wells Fargo. The institutions have all grown to occupy such a predominant position in the marketplace, that all three recently surpassed the Federal cap intended to prevent any one institution from controlling more than 10% of domestic deposits. A staggering realization of their scale.
Not that the Feds are going to do anything about it mind you, as the government is pushing for further consolidation. For the state, political pressure is enormous to support recovery and enduring stability, and thus Federal dependence upon these banks is near total.
Furthermore, the acquisitions of the superbanks have already extended far beyond North America, something that’s likely to accelerate as Europe’s recession deepens and ugly signs finally appear for Asia’s consumer export dominated economies. Thereby, the ultimate long-term beneficiaries of the financial crisis are likely going to be these surviving American commercial superbanks, not state regulatory authority or European institutions, as had been conjectured by many early on.
With consolidated assets allowing them to potentially dominate international commercial finance when business expansion revives, it is entirely conceivable at this point that the United States will end up occupying an even more dominant position in the world, thanks to the housing and credit crisis she nearly destroyed it with.
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