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- W3123433269 abstract "Large banking organizations were at the center of the recent financial crisis in the United States. For example, Wachovia Corporation, the fourth largest banking institution in the country at the time, experienced significant stress and its acquisition, by Wells Fargo, was announced in the first days of October 2008. JPMorgan Chase, also a top-five institution, acquired in late September 2008 the branch network of the largest thrift in the country, Washington Mutual, after that institution was declared unsound and then seized by the Federal Deposit Insurance Corporation (FDIC). As a response to the financial market turmoil that followed the collapse of Lehman Brothers, the Emergency Economic Stabilization Act of 2008 was signed into law on October 3, 2008. The Act established the Troubled Asset Relief Program (TARP), authorizing the U.S. Treasury Department to spend as much as $700 billion to prop up financial institutions in distress. Large banking organizations were the primary recipients of the transfers distributed through TARP programs. To gain some perspective on these and other events impacting large banking institutions during the crisis, we provide an overview of the evolution of the consolidated balance sheet and income statement of large U.S. bank holding companies between the beginning of 2005 and the end of 2011.Commercial banks in the United States are usually just one part of a larger legal and economic entity, a bank holding company (BHC). While pure banking activities constitute a significant portion of what BHCs do (Avraham, Selvaggi, and Vickery 2012), most of these financial companies are relatively large and complex institutions with numerous subsidiaries that undertake a wide variety of financial and banking activities. When trying to understand the way banking is being conducted and its evolution over time, focusing on just the commercial bank subsidiaries of BHCs is bound to give a distorted view. While surely there is significant operational decentralization in these large companies, for those issues that have the most economic and financial impact the ultimate decision unit is effectively the BHC. In line with this logic, we will concentrate attention on data at the consolidated BHC level.Our intention in this article is to provide a general overview of the main fluctuations and trends in the data characterizing the activities and performance of large U.S. BHCs in the recent past. We focus on companies with more than $10 billion in assets and use different ways (such as computing weighted means and splitting the sample using $50 billion in assets as a threshold) to try to gauge the extent to which company size is a factor in explaining the different experiences of companies during the turbulent seven years covered by our sample period. The role of large BHCs and how to regulate them has been the subject of active debate since the onset of the crisis. We think that the overview we provide here is useful to put in perspective the different explanations and proposals that have been offered-and are being offered-about the multiple issues surrounding these important players in the U.S. financial sector.The analysis of data carried out in this article could be considered a first step in the process of answering a number of important questions about the recent behavior of large BHCs in the United States. Examples of these questions are: Have the largest BHCs become even larger as a result of the crisis? Did the composition of their portfolios of loans and securities change during the crisis? How about the composition of their liabilities? Do they rely less on repos and other borrowed money after the crisis, for example? We also analyze the capital position of BHCs to gauge the extent by which, on average, these large BHCs exited the crisis with more and better-quality capital. Furthermore, we provide an overview of the impact of the crisis on quarterly earnings for these companies and we assess whether their off-balance-sheet activities have changed in response to the dismal performance of those activities during the crisis. …" @default.
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- W3123433269 date "2014-04-01" @default.
- W3123433269 modified "2023-09-23" @default.
- W3123433269 title "Large U.S. Bank Holding Companies during the 2007-09 Financial Crisis: An Overview of the Data" @default.
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