Like growing income inequality, the consolidation of the banking industry has been under-way since the 1980s. But the financial crisis and its aftermath exacerbated the trend, as policymakers encouraged stronger banks to swallow up weaker ones. Wells Fargo bought Wachovia, Bank of America took over Countrywide and Merrill Lynch, and JPMorgan Chase bought Bear Stearns, to name a few big mergers. Between the end of 2009 and 2013, the number of banks shrunk 17 percent, to 6,812, the lowest level since banks were first tracked in 1934, according to the Federal Deposit Insurance Corp. During that same period, total bank assets grew 12 percent.
The top two banks alone, JPMorgan Chase and Bank of America, control a quarter of all bank assets. If Jamie Dimon, CEO of JPMorgan Chase, or Brian Moynihan, head of Bank of America, makes a dumb decision (how could that ever happen?), the whole industry could feel the effects.