Today the entire banking system is dominated by a few very large banks, and almost all of them have the same exposures.

True if data from around April 2008 show that US banking assets were highly concentrated in a few very large banks (e.g. the top handful holding a large share of assets), and that these banks had substantially similar exposures (e.g. to mortgage-related securities, real estate, derivatives). Mostly true if concentration is confirmed and exposures were broadly similar, but with notable differences among the large banks. Mixed if concentration holds but exposures were clearly varied, or the reverse. Mostly false if only modest concentration existed, or common exposures applied to only a few banks. False if the system was not dominated by a few large banks and exposures were diverse.

Set before the research began.

1. E1 BIGGER BANKS, RISKIER BANKS: The Post-Bailout Continuation of a Pre-Bailout Trend Dēmos (report by Nomi Prins, James Lardner)

   “Experts and political leaders of both parties deplored the ability of profit-seeking insiders at a handful of “Too Big to Fail” institutions to bring the financial system to the edge of collapse”

2. E2 BIGGER BANKS, RISKIER BANKS: The Post-Bailout Continuation of a Pre-Bailout Trend Dēmos (report by Nomi Prins, James Lardner)

   “Since 1990, the overall number of banks has dropped from more than 12,500 to about 8,000.”

3. E3 Mortgage Mayhem Scorecard Wealth Management (wealthmanagement.com) · 1 December 2007

   “Most of the major U.S. banks and brokerage firms recorded massive write-downs of sub-prime and CDO (collateralized debt obligation) assets in the third quarter after late payments on U.S. home loans hit a five-year high.”

4. E4 Mortgage Mayhem Scorecard Wealth Management (wealthmanagement.com) · 1 December 2007

   “| Firm | Net CDO and sub-prime exposure at end of Q3* | Q3 pre-tax credit write-downs | Est. Q4 pre-tax credit write-downs** | |---|---|---|---| | Citigroup | $54.9 bn | $6.4 bn | $11.0 bn |”

5. E5 Bigger Banks, Riskier Banks: The Post-Bailout Continuation of a Pre-Bailout Trend Dēmos (Nomi Prins and James Lardner)

   “The Top 5’s share of assets stands at 48%, up from 26% ten years ago.”

6. E6 Bigger Banks, Riskier Banks: The Post-Bailout Continuation of a Pre-Bailout Trend Dēmos (Nomi Prins and James Lardner)

   “Over the past decade, the share of deposits held by the five largest commercial banks (currently Bank of America, Wells Fargo, JP Morgan Chase, Citi and U.S. Bank) has more than doubled, rising from 19% to 40%.”

7. E7 FDIC Quarterly Banking Profile, First Quarter 2008 (graph book) Federal Deposit Insurance Corporation · 2008

   “Commercial Lenders, 4,749 (55.9%)”

8. E8 Profits and Balance Sheet Developments at U.S. Commercial Banks in 2007 Federal Reserve Board (Federal Reserve Bulletin) · 12 February 2009

   “The share of assets held by the top 10 banks increased further, reaching 53 percent at the end of 2007, and the share of assets held by the top 100 banks rose to 80 percent.”

9. E9 Annual Report 2007 (FDIC) Federal Deposit Insurance Corporation

   “Of these FDIC-insured institutions, as of September 30, 2007, the 10 largest ones controlled almost 46 percent of the total assets of all insured financial institutions.”

10. E10 Citi Reports Fourth Quarter Net Loss of $9.83 Billion, Loss Per Share of $1.99 Citigroup Inc. · 15 January 2008

    “Results include $18.1 billion in pre-tax write-downs and credit costs on sub-prime related direct exposures in fixed income markets, and a $4.1 billion increase in credit costs in U.S. consumer primarily related to higher current and estimated losses on consumer loans.”

11. E11 $6bn in Q4 writedowns at Bank of America and Wachovia - Risk.net Risk.net (Infopro Digital) · 23 January 2008

    “Wachovia, which also revealed $1.1 billion in writedowns back in October 2007, is considered to have so far escaped the subprime crisis unscathed compared with the large Wall Street banks that took large positions in CDOs.”

The Federal Reserve reports that the top 10 US commercial banks held 53 percent of bank assets at the end of 2007, and the top 100 held 80 percent (E8). The FDIC puts the 10 largest insured institutions at almost 46 percent of assets as of September 2007 (E9). Together these show high concentration, even though thousands of smaller banks still existed (E2). On exposures, most major US banks and brokerages took large subprime and CDO write-downs in 2007 (E3, E4, E10), so their exposures were broadly similar. However, Wachovia was seen as having largely avoided the CDO losses of the Wall Street banks (E11), which is a notable difference among the large banks.