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As you might have guessed bank mergers have been the

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As you might have guessed, bank mergers have been the main culprit. As the number of bank mergers has increased beyond the number of new bank charters, the overall number of banks has declined. 78
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Econ 350 U.S. Financial Systems, Markets and Institutions Class 8 Economies of scale tell part of the story of bank mergers. As computers introduced new information processing efficiencies throughout the 1980s and 1990s, banks could take advantage of these new technologies by expanding and reducing their average cost of services. Another part of the story concerns globalization. As financial markets became increasingly globalized, American banks found they had to expand in order to compete effectively in the global financial marketplace. A major source of expansion was through mergers. Figure 8-4 bank failures 1934 - 2009 0 100 200 300 400 500 600 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 year number of bank failures Source: www.ffiec.gov 79
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Econ 350 U.S. Financial Systems, Markets and Institutions Class 8 Figure 8-5 Bank Mergers, 1990 - 2008 0 100 200 300 400 500 600 700 800 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 year number of mergers CB mergers SI mergers 2008 data YTD Source: www.ffiec.gov Finally, here are lists of the top ten banks in the United States in 2011. Note that the largest ones are close to two trillion dollars in assets. Due to the mergers of the financial crisis, many banks have doubled in assets in the last four years. Some banks on the list in 2005, such as Fleet and Wachovia, have merged into other banks. 80
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Econ 350 U.S. Financial Systems, Markets and Institutions Class 8 Figure 8-6 Top Ten US Banks, September 30 2011 Bank Name / Holding Co Name Nat'l Rank Bank ID Bank Location Charter Consol Assets (Mil $) Domestic Assets (Mil $) JPMORGAN CHASE BK NA/JPMORGAN CHASE & CO 1 852218 COLUMBUS, OH NAT 1,826,387 1,164,647 BANK OF AMER NA/BANK OF AMER CORP 2 480228 CHARLOTTE, NC NAT 1,466,417 1,358,603 CITIBANK NA/CITIGROUP 3 476810 SIOUX FALLS, SD NAT 1,300,674 690,932 WELLS FARGO BK NA/WELLS FARGO & CO 4 451965 SIOUX FALLS, SD NAT 1,142,254 1,114,502 U S BK NA/U S BC 5 504713 CINCINNATI, OH NAT 319,449 316,835 PNC BK NA/PNC FNCL SVC GROUP 6 817824 WILMINGTON, DE NAT 261,236 259,320 BANK OF NY MELLON/BANK OF NY MELLON CORP 7 541101 NEW YORK, NY SMB 251,529 160,510 HSBC BK USA NA/HSBC NORTH AMER HOLD 8 413208 MCLEAN, VA NAT 203,675 184,697 STATE STREET B&TC/STATE STREET CORP 9 35301 BOSTON, MA SMB 203,490 141,089 T D BK NA/TD US P & C HOLD ULC 10 497404 WILMINGTON, DE NAT 187,535 187,535 Summary: Total number of banks: 1,669 Total assets (millions): Consolidated: $11,785,716 | Domestic: $10,139,810 Explanation of column headings: Charter: Chartering authority and Federal Reserve membership status NAT=Nationally chartered member bank SMB=State-chartered member bank SNM=State-chartered nonmember bank 81
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Econ 350 U.S. Financial Systems, Markets and Institutions Class 8 82
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