Mar 14 2012

How many banks are in the US? Number of US banks shrinks while banking assets increase.

Do you ever wonder how many banks are active in the United States?  Do you ever think about the amount of assets held at these banks?  More people today have taken a thorough desire at learning the details about their banking system and this is for the better.  US banks are backed by the Federal Deposit Insurance Corporation, or FDIC for short.  What is surprising since the financial crisis hit is that the total asset base of banks has increased while the number of US banks has actually decreased.  One of the big issues was around the too big to fail banks of our current banking system.  Much of the banking wealth is aggregated into a few large banks.  Not much has changed to reverse the too big to fail model.  To the contrary these too big to fail banks have gotten even bigger.  So how many banks are in the US?

dollar bill george washington

How many banks are in the US?

To find the current figure on banking data we can head over to the FDIC site and pull up a few charts.  The first chart will look at the total number of US banks:
number of us banks

Source:  FDIC

The number of FDIC insured banks is under 7,500.  The trend has moved in one direction since 1995.  It is surprising to many Americans that even prior to the Great Depression, the US had over 20,000 active banks.  The consolidation of banking into a few larger banks is a long-term trend.

While the overall total number of banks has shrunk, the total asset base has increased:

assets of savings institutions

US banks have roughly $14 trillion in total assets.  The term asset is used loosely because many of these banks have real estate loans that are valued significantly lower than their current book value.  In accounting you are taught to mark-to-market values to get an accurate picture of your true holdings but this rule was suspended during this crisis.

The rise of problem institutions is still very high for US banks.

problem bank list

While much of the current data seems to pointing at more jobs, there are still a number of banks in deep trouble.  Keep in mind that US banks need to keep certain capital requirements just to stay compliant.  A recent stress test done by the government found that four large banks failed the actual test.

How many banks are in the US?  The total number is 7,357.

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Mar 11 2012

What would Benjamin Franklin say about the current economy? Can we consider Benjamin Franklin as the first American personal development blogger?

Benjamin Franklin was one of the Founding Fathers of the United States and a noted polymath.  Fascinated by many things in life.  I just completed reading his biography and was even more enthralled by this great American hero.  His biography reads like a how-to manual on how to live a highly engaged life.  This is a man who invented the lightning rod, bifocals, a carriage odometer, and was also the first United States postmaster.  I deeply value his opinions and after reading his biography, I was left wondering what would Benjamin Franklin think of the current state of the economy?  Would he be pleased?  What would he want to be different?  I wanted to pull some items out of his biography and tie them into our current state of affairs.  We would do ourselves a great favor if we really followed in his philosophy of seeking out the truth, no matter if it shakes our own strong convictions.  In a way, he was one of the first personal development “bloggers” by publishing Poor Richard’s Almanack trying to reach out and help many Americans with common sense and rigorous observations.

Benjamin Franklin

“and gaining money by my industry and frugality, I lived very agreeably, forgetting Boston…”

Benjamin Franklin was always a character of frugality and master of using whatever he was given.  He did not come from a wealthy family.  He was merely getting by for the early part of his career but he always pushed forward.  He valued hard work, discipline, and even lived on a mostly vegetarian diet.  He was a man of pragmatism.  I’m not sure he would be fond of how people are massively in debt today and many do not value hard work.  He was proud of being an early riser.

“So I din’d upon cod very heartily, and continued to eat with other people, returning only now and then occasionally to a vegetable diet.” 

He wasn’t extreme in his diet.  He adjusted to this diet since he viewed people living on very little yet going into old age.  He reasoned that a low intake diet might be a reason.  There is even proof today of a low-caloric diet for longevity.  Given this, I’m not sure how fond he would be with the prevalence of fast high calorie foods that dominate the market.      

“I went on, however, very cheerfully, put his printing-housing in order, which had been in great confusion, and brought his hands by degrees to mind their business and to do it better.” 

Early on his career when he arrived back from a stint in London, he worked hard in a printing-house.  His philosophy was of hard-work but of intelligently making things better and getting others to carry their weight.  He mentions an Oxford scholar who found himself bought as a servant.   The fellow seemed very intelligent yet “idle, thoughtless, and imprudent to the last degree.”  In other words, having a college education is not the only thing in life that matters in regards to success.  I have this feeling that many are going to college just going through the motions but not putting in the extra time to go above and beyond the basics.  After the degree is in hand, it is what you do with it that matters.

“But he knew little out of his way, and was not a pleasing companion; as, like most great mathematicians I have met with, he expected universal precision in everything said, or was forever denying or distinguishing upon trifles, to the disturbances of all conversation.  He soon left us.”   

Benjamin Franklin put together a sort of brain trust group that met on a frequent basis to discuss ideas.  Any idea.  The group was to be objective and observe things for what they were and to keep emotions out of it.  I see how broken down our political system has gotten and I think Benjamin Franklin would be appalled.  People today would rather win an argument than get to the bottom of what is objectively the best solution.  His comment on a mathematician in the group reminds me that sometimes in life, a complex one as the one we are given, is never going to be precise.  To solve our economic challenges we must accept some imperfections to reach a better solution.  We would be wise to listen to one of the most accomplished Americans ever.

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Mar 10 2012

The weekly financial scoop: More jobs, more debt, and low-rates on savings accounts

The week had some interesting news before we enter into daylight savings mode.  We found out that 227,000 jobs were added and the unemployment rate remained steady as more Americans entered into the labor force to find work.  Job hiring is still tepid at best so this was seen as cautious information and the neutral stock market reflected this.  We also received bailout news #213 on Greece regarding the never ending bailout story.  It is well known that Greece will not be able to pay off their debt in this given lifetime.  This is fact.  Yet what has been occurring is merely a delaying of the inevitable.  Greece has two roads ahead; either a correction through a slow decade (or more) of austerity or a deep and potentially disorderly collapse if Greece were pushed out of the Euro.  Too much money is at play here for giant banks so the push is for a fierce amount of austerity ahead.  Not a good time to be working class in Greece

Today we examine some of the interesting links around the web:

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