Banking Industry Consolidation Creates Monopolies, Harms Consumers

Andy Spears
4 min readSep 16, 2021

Advocates Offer a Path Forward

One might think that since the financial crisis of 2008, the banking industry has improved practices to both help consumers and prevent another meltdown. Actually, I’m not entirely sure who might think that. Anyone paying attention to the behavior of groups like Wells Fargo and JPMorgan Chase knows that the big banks are going with gusto — taking every opportunity to extract dollars from consumers while building the dominoes that may soon cause another catastrophe. And, why not? After all, the banks were bailed out, executives saw bonuses, and profits are soaring.

A recent blog post by Pamela Foohey at Harvard Law Review highlights both the urgent need for action and some potential solutions to protect consumers.

Check this out:

Over the last forty years, the banking industry has become much more concentrated. In 1980, the ten largest banks held 13.5 percent of all banking assets, but by 2010, they held roughly fifty percent. By 2018, the top six banking institutions had assets worth fifty percent of U.S. gross domestic product. The top four banks — JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America — also issued more than half of all credit cards in the U.S. in 2018.

At the same time, the frequency of bank mergers continues to accelerate. There were over 10,000 more commercial banks in the U.S. in 1984 than at the end of 2020, a loss driven predominantly by acquisitions. During that same period, the Justice Department has not challenged a single bank merger, and the Federal Reserve approved ninety-five percent of merger applications in 2018, setting a new record. Now, experts predict there will be a new wave of bank mergers and acquisitions as the economy recovers from the COVID-19 pandemic.

You’re telling me that scandal-rocked Wells Fargo is growing tremendously and that the largest banks are only getting larger while also engaging in some of the same shady practices that led to the financial crisis that crippled so many American families? Yep! And, wait, you’re also saying that the federal government is just going along with this game- knowing full well that it could lead to another meltdown? Also, yes!

If only we had a President determined to do something about it. Perhaps a modern-day FDR type who was willing to take on the oligarchy in some way.

Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .