The words of Mark Zandi, chief economist of Moody’s Economy.com, as quoted in this Washington Post story. It seems that the champion of the people, Barack Obama, has been encouraging the consolidation of big banks, leaving consumers with fewer and fewer choices. The big banks are gobbling up the mid-sized and making themselves even more too big to fail.
The worry for consumers is that the bailouts skewed the financial industry in favor of the big and powerful. Fresh data from the FDIC show that big banks have the ability to borrow more cheaply than their peers because creditors assume these large companies are not at risk of failing. That imbalance could eventually squeeze out smaller competitors. Already, consumers are seeing fewer choices and higher prices for financial services, some senior government officials warn.
Those mergers were largely the government’s making. Regulators pushed failing mortgage lenders and Wall Street firms into the arms of even bigger banks and handed out billions of dollars to ensure that the deals would go through. They say they reluctantly arranged the marriages. Their aim was to dull the shock caused by collapses and prevent confidence in the U.S. financial system from crumbling.
Officials waived long-standing regulations to make the deals work. J.P. Morgan Chase, Bank of America and Wells Fargo were each allowed to hold more than 10 percent of the nation’s deposits despite a rule barring such a practice. In several metropolitan regions, these banks were permitted to take market share beyond what the Department of Justice’s antitrust guidelines typically allow, Federal Reserve documents show.
Four big banks now issue about one of every two mortgages and two out of three credit cards. They are squeezing the mid-sized regional banks and likely adding to the number of failures.
You can thank Obama and his economic team for what is happening right now.
You should be worried about this.
The FDIC closed another bank today and sold the remains to M&T Bank. It was a relatively small bank as these things go, but it is yet another domino falling.