Download this Paper Open PDF in Browser

Increased Concentration in Banking: Megabanks and Their Implications for Deposit Insurance

60 Pages Posted: 20 Jul 2004  

Kenneth D. Jones

State Street Corporation

Chau Nguyen

Federal Deposit Insurance Corporation

Multiple version iconThere are 2 versions of this paper

Date Written: June 2004

Abstract

During the past two decades, the U.S. banking industry has experienced an unprecedented wave of consolidation, marked by a substantial decline in the number of insured depository institutions and the emergence of banking behemoths with assets totaling in the hundreds of billions of dollars. This unparalleled concentration of assets and deposits among a handful of megabanks has important implications for deposit insurance. Most importantly, the Federal Deposit Insurance Corporation (FDIC) now faces a situation in which the failure of even a single megabank could overwhelm the resources immediately available to the deposit insurance system and expose both the banking industry and the government (i.e., taxpayers) to huge potential liabilities. This article highlights the current structure of the banking industry, examines the threat that this structure poses to the deposit insurance funds, and suggests possible approaches for dealing with megabanks and the increasing concentration of insured deposits.

Keywords: Banking, Megabanks, Deposit Insurance, Consolidation

JEL Classification: E44, E53, G21, G28

Suggested Citation

Jones, Kenneth D. and Nguyen, Chau, Increased Concentration in Banking: Megabanks and Their Implications for Deposit Insurance (June 2004). Available at SSRN: https://ssrn.com/abstract=566041 or http://dx.doi.org/10.2139/ssrn.566041

Kenneth D. Jones (Contact Author)

State Street Corporation ( email )

Boston, MA 02111
United States
617-662-0370 (Phone)

Chau Nguyen

Federal Deposit Insurance Corporation ( email )

550 17th Street NW
Washington, DC 20429
United States

Paper statistics

Downloads
273
Rank
82,806
Abstract Views
1,870