Banks branded as "too big to fail" are getting bigger even in wake of TARP bailout programs, the Dodd-Frank financial overhaul regulations and even as the country reels from the worst recession in recent history, Bloomberg reports.
"The largest banks have grown larger since the financial crisis, and the number of 'too big to fail banks' will increase by 40 percent over the next 15 years," Bloomberg reports,
Today, the top 10 banks hold 77 percent of all U.S. bank assets, compared with 55 percent of the total assets in 2002, the news service adds.
As of December of last year, 35 banks had assets of $50 billion or more, a number seen rising to 48 within 15 years.
Assuming current growth in the financial sector, more banks will be designated as risky under the Dodd-Frank law.
A watchdog panel overseeing the bank bailout program agrees that too-big-to-fail banks are here to stay and with them, risky behavior.
"Very large financial institutions may now rationally decide to take inflated risks because they expect that, if their gamble fails, taxpayers will bear the loss," according to a report authored by the Congressional Oversight Panel, Reuters reports.
|Assistant Treasury Secretary Timothy Massad
Treasury officials have been quick to go on the defensive.
Assistant Treasury Secretary Timothy Massad, the Treasury official in charge of the bailout program, said it was "simply wrong" for companies to think that the government would provide assistance to bail them out in the future.
The Dodd-Frank financial reform bill "makes it clear that we should not use taxpayer funds for that," says Massad, according to Reuters.
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