“Memo to Chris Dodd and Barney Frank: If one of the major parts of Dodd-Frank was to do away with Too Big to Fail, a check on the facts makes you wonder what the heck happened. In 2006 before your legislation, the four biggest banks (JP Morgan, BofA, Citigroup, and Wells Fargo) controlled 44% of total U.S. bank assets. Today, they control 51% of bank assets…

…We don’t like the idea of Congress forcing a break-up of the big banks, but all that size certainly hasn’t helped their shareholders. What we need are some bold Board members to push hard for a break-up, not in the national interest but because it’s in the best interest of the shareholders.  Here’s how two of the biggest have done, losing vast amounts of shareholders’ money over the past ten years:

February 20, 2006 February 20, 2016 Decline
Citigroup $401.87 $38.99 90.1%
Bank of America $36.55 $16.10 55.9%

Wells Fargo stock is up 97% during the past ten years, and while they’re probably too big to fail, they hardly seem like a candidate for failure.  But this is the deal:  The Too Big to Fail banks would do their shareholders a favor by breaking themselves up, not because someone like Bernie Sanders wants them to, but because giant banks simply do a horrible job of risk management and looking out for shareholders.”,Excerpt from February 28, 2016 Mortgage Industry Newsletter

“As I have noted on this blog, don’t break up the banks, just cap the amount of federally-insured (guaranteed) deposits any one bank may have. Pick an amount, but it shouldn’t be more than $100 billion, in my view.”, Mike Perry, former Chairman and CEO, IndyMac Bank

Posted on March 1, 2016, in Postings. Bookmark the permalink. Leave a comment.

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