FORTUNE — One third of all business loans this year were made by Bank of America. Wells Fargo funds nearly a quarter of all mortgage loans. And held in the vaults of JPMorgan Chase is $1.3 trillion, which is 12% of our collective cash, including the payrolls of many thousands of companies, or enough to buy 47,636,496,885 of these NFL branded toaster ovens. Thanks for your business!
A lot has changed since the financial crisis. A number of large banks and Wall Street firms have disappeared. There are new regulations in the works meant to limit risky trading and bring derivatives that compounded the financial system’s losses into regulated markets. Subprime lending has been coming back recently, but it’s still a fraction of what it once was.
But at least one of the widely recognized causes of the financial crisis is not only still around, it has perhaps gotten worse. By every measure I can think of, and I have tried a bunch, the big banks are bigger than they were five years ago, at the dawn of the financial crisis.
“We still have many of the excesses we saw leading up to 2008,” says Robert Reich, the Berkeley economics professor and a former Labor Secretary. “They [the banks] are still too big to fail, too big to jail, and too big to manage well.”
The six largest banks in the nation now have 67% of all the assets in the U.S. financial system, according to bank research firm SNL Financial. That amounts to $9.6 trillion, up 37% from five years ago. And the big banks seem to be getting better at acquiring assets all the time. The overall growth of assets in the system in the same time is up just 8%.
The biggest bank in the nation, JPMorgan (JPM), has $2.4 trillion in assets alone — the size of England’s economy. And JPMorgan is seven times larger than the nation’s No. 10 bank U.S. Bancorp (USB), which itself has $350 billion in assets — along the lines of Austria — and at this point is probably part of the TBTF club as well. Also way up: Profits. The four biggest banks in the U.S. alone, which along with JPMorgan include Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), made collectively nearly $45 billion in the first six months of the year, nine times what those same banks made five years ago.
Assets have grown more than many other size metrics. But across the board, nearly every measure of the big banks’ size is up. In terms of loans, according to FDIC data, 42% of all loans outstanding by U.S. banks come from the five largest. That’s up from 38% before the financial crisis. The four biggest banks in the nation employ just over 1 million people. That’s up from around 900,000 just before the financial crisis.
And those big banks have less competition. Just over 1,400 banks have disappeared in the past five years. About 485 failed. The rest were merged into other banks.
Earlier this week, the government released a presentation about what regulators have accomplished since the financial crisis. On one slide there is a big red check next to “end too big to fail.”
In fact, regulators have had little success forcing the big banks to shrink. Provisions of the Dodd-Frank law imposed new costs, particularly on the largest financial firms. The idea was that the executives of the big banks would take a look at all the new rules and decide on their own, or under pressure from investors, that it was better to be smaller. But so far that doesn’t seem to be the conclusion Wall Street came to. Shares of the biggest banks have rebounded sharply in the past two years.
And Dodd-Frank never created a permanent bailout fund that could be used to pay for the job of cleaning up a big bank failure. Instead, the law relies on the FDIC to do the job. But the FDIC’s resolution fund has just $37.9 billion in it, which is less than one half of one percent of the assets in the big banks. It’s hard to see our way around another big bailout fund, if trouble arises again.
“We’re not done fixing the financial system,” says Michael Barr, a law professor at the University of Michigan and a former Treasury official who was instrumental in putting Dodd-Frank in place. “But if you say we are just as bad as we were before, that’s not the case either.”
This week there has been a parade of officials who have denounced banks as still too big to fail. Massachusetts Senator Elizabeth Warren once again said it was time to break up the big banks. Even JPMorgan CEO Jamie Dimon has said no bank should be too big to fail.
But maybe big banks aren’t as bad as everyone seems to think. Large banks, perhaps because of bailouts, are generally believed to be able to borrow more cheaply than smaller banks. (The math of that is complicated.) If they pass those savings along to borrowers that means it will be cheaper for all of us to buy houses and start new businesses. That might make having big banks an advantage for the U.S. economy. Let’s hope so. Because it looks like we are stuck with them.