Three years after the great financial meltdown of 2008, leaders in the financial industry still haven't acknowledged the systemic faults that led to it. Instead, we have seen them launch a high-profile public relations and lobbying campaign to limit proposed regulatory changes, saying that higher capital requirements and too much regulation will hinder the economic recovery.
Off the record, it's another story. Almost everyone I talk to privately in the financial industry says there are six mega-banks that should be broken up or subjected to greater regulatory constraints - and that doing so wouldn't hurt the economy one bit. When I suggest they speak out publicly, they say, "I just can't break ranks with the rest of the industry." It's the Wall Street version of "No Snitch" tee shirts worn by inner city gang members, creating a self-enforcing culture of non-cooperation with law enforcement.
Everyone knows that the six mega-banks -- JP Morgan, Citibank, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley -- are "too big to fail," so large that the collapse of any one of them could bring down our entire financial system. The total assets of these six banks are now 64% of the U.S. Gross Domestic Product (GDP). Fifteen years ago the assets of the top six banks were just 17% of GDP. Most of that incredible percentage increase was the result of shotgun marriages during the precarious days of 2008. Bank of America absorbed Merrill Lynch and Countrywide; JP Morgan scooped up Washington Mutual and Bear Stearns; Wells Fargo swallowed Wachovia.
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