Dallas Fed – Top 5 Wall Street Banks Own 50% of GDP

Editor’s Note: Considering that the top megabanks OWN the federal reserve system to begin with, this seems to be more a case of rubbing people’s noses in the success of fascism rather than some type of public service announcement.

The Dallas Federal Reserve has just released its damaging annual report titled “Choosing the Road to Prosperity – Why We Must End Too Big to Fail—Now” which reads much like a manifesto of the Occupy Wall Street movement.

The report holds no punches in pointing out the concentration of wealth that has been amassed in nation’s top Wall Street Banks following the bank bailouts and directly calls out too big to fail as a perversion of capitalism.

If  it wasn’t for the pro-federal reserve talking points in the annual report, you could replace the title on the report with “Why We Occupy” and use it as a handout for the Occupy movement.

In any case, the Dallas Federal Reserve’s annual report hammers home the case of why the “Too Big To Fail” Wall Street banks need to be broken up to restore a more balanced approach to economic equality in the United States.

Box 2 – Too Big To Fail Is A Perversion of Capitalism

Here are some more of the charts and graphics from the report.

Exhibit 1 – Total Time Spent in Recession.

Exhibit 1 argues for the existence of the Federal Reserve by pointing out that prior to the 2008 financial collapse the Federal Reserve has greatly reduced the time that the United States spends in a recession.

It shows that in total the US spent less time in recession prior to the 2008 financial collapse than the entire time spent during the Great Depression.

Of course, the argument falls apart when including the 2008 collapse into the equation, because the data shows that post 2008 collapse, the US has spent more time in recession than even during the great depression.

This explains the motivation for this report from the Federal Reserve – they are deflecting the blame for the Great Recession of 2007 on the massive concentration of wealth in Wall Street banks.

Exhibit 1 – Dallas Fed Annual Report – Time Spent In Recession

Exhibit 2 – Concentration of Wealth In Wall Street Banks Increased Dramatically

This exhibit lays the foundation for the Feds argument point out how the concentration of wealth in the top 5 Wall street banks went from being on 17% of the industries wealth in 1970 to being 52% in 2010.

Meanwhile, the next 95 large and medium size institution’s saw their wealth shrink a nominal 5% – from 37% to 32% over the same time period.

Clearly the loser is the thousands of smaller local banks.

12,500 were in existence in 1970 when they owned 46% of the banking industries wealth.

Today there are only 5,700 smaller banks in the picture and their ownership of the banking industries total assets has grown to a measly 16% of the market.

Exhibit 2 – Dallas Fed Annual Report – Concentration Of Wall Street Wealth

Exhibit 3  – US Employment Evaporates with the implosion of the Financial System

This exists as one very wide infographic in the Fed’s annual report. I have split it into 2 parts to fit it on the webpage while still being readable.

As you can see the Federal Reserve holds no punches in the timeline which beings with the headline “Trouble Starts With The Shadow Banks”

The timeline outlines the progression of events that begins with Wall Street’s larger shadow banks and investment banks following the lead of the smaller shadow banks in getting in over their heads in the sub-prime mortgage racket.

Wall Street banks knew full well of what the risks were but seeing the massive profits the smaller shadow banks were making they jumped into the market head first.

When shit hit the fan we first see some of the weaker shadow banks fail, which in turn leads to the CEO’s of major Wall Street Banks resigning from their position.

As the house of cards fall, banks start failing left and right and the US is required to step in and nationalize some of the more import banks to prevent the entire system from going under.

Ultimately the collapse continues to spiral out of control as number of bank failures heads into the thousands and the government is required to step in and backstop Wall Street banks to keep them afloat.

The result of the fallout is American jobs evaporating at a shocking 800,00 jobs per month and hundreds of banks being listed as “troubled” and kept afloat with hundreds of billions of taxpayer dollars being used as a life-preserver to keep them from drowning

Exhibit 3 A – Employment plummets as financial system implodes

Exhibit 3 B – Employment plummets as financial system implodes

Exhibit 4 – Total Assets in Assisted and Failed Institutions Reaches Extraordinary levels

This exhibit shows the $542 billion dollars in assets that just disappeared in 2008 and 2009 with another $3.2 trillion dollars under the control of government assisted institutions.

Clearly to grand total of $3.77 trillion dollars being under the control of Wall Street Banks – an amount higher the total amount of money that actually exists in circulation in the United States – underscores the dangers of too big to fail.

Exhibit 4 – Total Failed Assets Reach Extraordinary Levels

The Raw Story has just ran an article summarizing the issues of the report.

Dallas Fed: Top five U.S. banks hold over half of industry’s assets

In its annual report for 2011, issued on Wednesday, the Federal Reserve Bank of Dallas released a startling report revealing that 52 percent of all the assets held by the entire banking industry have now become aggregated into the hands of just five companies, and the top 10 institutions have swollen so large that they possess wealth that equates to roughly half of America’s annual gross domestic product (GDP).

It is for those reasons that Dallas Fed president Richard Fisher, who’s otherwise known as a conservative budget hawk, has embraced the radical cause of breaking up the nation’s largest banks and forever ending “too big to fail.” In a letter introducing the 2011 report, he cautions that Congress may not have gone far enough with prior attempts at financial reforms, and that those bills may even be working against the struggling economic recovery underway.

Alarming as that sounds, it’s the Dallas Fed’s chart of U.S. banking assets that’s most startling.

Read more at Andy Sutton’s Extemporania