The 2008 financial crisis is at the back of investors’ minds – at least when it comes to the balance sheets of the three largest lenders: JPMorgan Chase (JPM), Bank of America (BAC) and Wells Fargo (WFC).
As reported by The Wall Street Journal, citing data from Novantas, customers are depositing buckets of money with the big three, which have seen their deposits swell by $2.4 trillion since the financial crisis. While their balance sheets are benefiting from increased customer deposits, the nation’s regional and community banks are suffering.
Novantas said that 45% of the checking accounts opened last year were at the big banks, even though they had only 24% of U.S. branches. Regional and community banks had 76% of the branches but only got 48% of the new accounts.
As small banks lose out on attracting deposits, experts say they are unfairly targeted by regulations. The Senate just passed a bill that would loosen the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 on all but the largest U.S. banks.
Smaller banks will benefit the most from a rollback in regulations,” Vertical Group analyst Dick Bove told Fox Business’ Maria Bartiromo on “Mornings with Maria.”
One criticism is that small banks lack scale compared with bigger banks and struggle with the associated costs.
When the financial crisis hit and there were concerns of a liquidity crisis, the government stepped in to bail out the major financial institutions to the tune of $700 billion.