Bank Consolidation Continues

By Ted Dieck | Recruiter’s View - Bank Failures - Economy | Dec 5, 2023

Last year, U.S. banks closed 2,000 more branches than they opened.  This year, the Too-Big-To-Fail Banks have cut their payrolls by a combined 20,000 employees.  Things are a little different for JPMorgan Chase, the largest and most profitable bank in the U.S.

Last March, we began watching the collapse of…

  • Silicon Valley Bank
  • Signature Bank
  • Silvergate Bank
  • Credit Suisse (I know it wasn’t a U.S. bank.  But it was big.)
  • First Republic Bank

At the same time, the Fed continued to raise interest rates.

We revisited the bizarre concept of a Systemically Important Financial Institution (SIFI).  We noted that half a dozen of these Too-Big-To-Fail Banks seemed to enjoy certain benefits.

And we watched those protected SIFI banks remove $100 billion from the smaller banks, just in the month of March.

Money Flows To The Top

Cash and power continues to flow from the smallest to the largest, particularly as the financial industry is battered by…

  • High interest rates,
  • Troubled real estate,
  • Stunned Auto industry, and a
  • Weakening economy.

Even the SIFI banks are trying to get smaller.

“In total, some 54 locations had either closed or were scheduled to close between October 1 and October 7.” (Daily Mail)

JPMorgan Chase, however, lives in a whole different world.  It’s the biggest bank in the country.

It’s powerful, profitable, and protected.
And it can be aggressive.

Here’s a small taste of what seems to be normal for JPMorgan Chase…

JPM Busted, Boycott, And A Buy Out

2019 —  Caught price-fixing in precious metals markets, JP Morgan signed a  3 year-long Deferred Prosecution Agreement (DFA) with the US Department of Justice (DoJ).  JPM paid $920 million “in a criminal monetary penalty, criminal disgorgement, and victim compensation.”  Although admitting criminal wrongdoing, JPM avoided prosecution by the DoJ.  In 2023, three of JP Morgan’s top former gold traders were sentenced to jail.

2022 — 15 states threatened to boycott ESG lenders, blocking more than $600 billion of financial services business.  See Miners Dig-In Against ESG
West Virginia acted first, barring six major ESG lenders from bidding on $18 billion of state contracts.
JPMorgan Chase was one of those lenders.

2023 – JPMorgan Chase (NYSE: JPM) acquired First Republic Bank from the Federal Deposit Insurance Corporation (FDIC).  In an emergency agreement, JPM took over $173 billion of loans, $30 billion of securities, and $92 billion of deposits, announcing, “First Republic branches will open on Monday, May 1, as normal.”

JPM seems powerful enough to withstand anything.

That power is magnified when everyone else is suffering under a weakening economy.

U. S. Economy In Decline

The Conference Board’s index of leading economic indicators has now fallen for 18 months in a row.

Comparing the first nine months of this year, versus the same period a year ago…

  • Commercial Chapter 11 bankruptcies are up 61%.
  • Home foreclosures are up 34%.
  • Sales of previously owned homes are down 15.4%.

Recruiter’s View

This country, and likely the world, is headed down a very rough road.

The strongest organizations will increase their dominance.
Predatory investors like BlackRock will feast on the vulnerable.

Avoid weakness.