Yesterday I did a post on “How safe are your bank stocks from tightening monetary conditions?” Today I want to delve further into the four major US banks’ balance sheets to see what surprises we might find. All four banks — Bank of America (BAC), Citigroup (C), JP Morgan Chase (JPM) and Wells Fargo (WFC) — are huge. They each have assets over $1 trillion, with JPM and BAC even surpassing $2 trillion. But those assets come with almost equally massive liabilities. A sudden change in monetary conditions could have huge affects on both sides of these banks’ balance sheets.
Below we see that WFC and JPM have been increasing assets and liabilities while Bank of America & Citigroup have remained flat. The same is true for liabilities (graph 1). What’s interesting is all our banks have been accumulating deposits without loaning out the money (graph 2).
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