Reference no: EM133119286

There are twelve commercial banks, listed below, in the United States that on December 31, 2020, had over $250 Billion in total assets. If any of these banks failed due to mismanagement, it is highly likely that the regulators would step in to bail them out and not permit them to fail. [Among other affects, this would avoid wiping out the stockholders. I wish I had that kind of backing when I was running my businesses.]

What are some of the advantages this gives these twelve banks over banks that are not quite as large, say between $10 Billion in total assets to $250 Billion? What are some of the advantages this gives them over commercial banks that are considered "community banks" of less than $1 Billion in total assets? For either, should these advantages be allowed? If so, what should be done to encourage formation of super-large banks? If not, what should be done to prevent it?

Note that even among the largest twelve, the largest four are significantly larger. Citibank at #4 had $1.66 Trillion in assets and nearly $1.3 Trillion in deposits. That is roughly three times the levels of the next largest bank.