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Friday, March 6, 2015

Too Big to Fail Banks Ranked

Friday, March 06, 2015

JPMorgan Chase has earned the distinction of being the largest bank among those deemed too-big-to-fail for the sake of the U.S. financial and economic systems, according to a new government report (pdf).

The federal Office of Financial Research (OFR) ranked 12 U.S. financial institutions based on their “total exposures.”

No. 1 was JPMorgan Chase followed by Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley.

Among the conclusions produced in the report are findings that “the largest U.S. banks generally scored highest for all systemic risk indicators,” and that “several of the largest banks scored high in systemic importance because they dominate specific businesses, such as payments and asset custody services.”

The authors of the OFR report based their findings on data collected by the Federal Reserve System. That data was significant, they said, because it provides additional transparency that helps to quantify important aspects of the banking system.

Their evaluation was made by comparing scores on the banks’ sizes, global activity, complexity, interconnectedness, and dominance in certain areas of customer service.

To Learn More:
Systemic Importance Indicators for 33 U.S. Bank Holding Companies: An Overview of Recent Data (by Meraj Allahrakha, Paul Glasserman, and H. Peyton Young, Office of Financial Research) (pdf)