Treasury Secretary Janet Yellen says that the banking industry will likely consolidate further into bigger giants as the industry continues to weather hard times.
This week, Yellen met with over two dozen CEOs and executives convened by the Bank Policy Institute (BPI) to discuss the current state of the economy and President Biden’s economic agenda.
According to the Treasury,
“Secretary Yellen reaffirmed the strength and soundness of the U.S. banking system, noting that it remains well-capitalized with strong liquidity. She noted that decisive federal action taken by regulators and the Administration in March to protect depositors helped to strengthen public confidence in the banking system and mitigate financial contagion.”
Although Yellen appears to be projecting the strength of the US banking system, CNN cites sources familiar with the matter that the Treasury Secretary also discussed the possibility of bank mergers during the meeting.
According to CNN, Yellen told the CEOs and executives that more bank mergers in the future may be necessary.
Yellen’s comments come following the big JPMorgan takeover of First Republic Bank, which collapsed last month before being seized by the US government.
JPMorgan Chase, the largest bank in the US, acquired about $173 billion worth of loans, $30 billion worth of securities and $92 billion worth of deposits, both insured and uninsured.
Jamie Dimon, Bitcoin (BTC) critic and CEO of the bank, said,
“Our government invited us and others to step up, and we did… This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.”
While Dimon and JPMorgan shareholders were happy with the takeover, others were concerned about the increasing concentration of power in the industry.
Massachusetts Democrat Elizabeth Warren, who is also a staunch cryptocurrency opponent, reportedly warned that the size of JPMorgan was becoming a potential threat to Americans.
“What happened here is because a bank was under-regulated and started to fail, the federal government has helped JPMorgan Chase get even bigger…
It may look good today while everything’s flying high, but ultimately if one of those giant banks, JPMorgan Chase, starts to stumble, the American taxpayers are the ones who will be on the line.”Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
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