In 2008, when the financial crisis just about hit its peak, the term “too big to fail” started getting tossed around. It was the idea that certain banks had grown so big and so powerful that if the government didn’t prop them up, there would be an economic disaster. Fast-forward three years through much more turmoil in the banking world, an Andrew Ross Sorkin book and the nerdiest HBO movie ever, and the question of whether our banks are too big to fail is still unanswered.
But the big ones are even bigger. So, where does that leave your local bank?
An analysis put out late last week by Wendell Cochran of American University’s Investigative Reporting Workshop, found that, if anything, the big banks are probably going to get bigger. Cochran’s analysis is not totally unlike a lot of other ones out there that, if you’re not particularly familiar with banking, might go over your head. But Cochran’s is based on a tool he developed called BankTracker, a tool which not only shows you the data that he’s talking about, but lets you find where banks on your beat fit into the big story.
What makes BankTracker useful to a regular business reporter is that it allows you to look up any bank in the country and see how healthy their assets are and a bevy of other information that local bank execs might be reluctant to chat with you about, or that might not occur to you to look into.
It is possible that the big banks will continue to get bigger, but a variation on that theory that might play out on your local beat, is that the biggest banks currently in existence have topped out in their growth – and now mid-size and regional banks will become the focus for growth.
Bank of America, which has been troubled lately, and announced yesterday that it will lay off 30,000 employees in the next five years – so who is going to step up and fill that gap? Another already big bank, or a new big bank? In other words, if consolidation is the key term in the banking industry these days, which bank in your neighborhood is going to be swallowing the others?
Cochran’s report is in the context of what’s been happening in the banking scene nationally – besides the concern that big banks might just be getting bigger, he also notes that the number of under-performing loans and banks with bad assets continuing to decline nationally – but with different parts of the country hit by the economic downturn differently depending on how real-estate dependent they were (and also now recovering from differently) national trends aren’t always much help to your readers. The beauty of BankTracker is it lets you see what the trends are in your neighborhood.
How are the banks on your beat faring?
What about the credit unions – many of which traditionally were less involved in some of the more dramatic mortgage wheeling and dealing – but some of which may be more vulnerable without big powerful corporate allies?
One interesting thing to note is that not all banks are created equal – there are banks that cater to business lending and those that cater to the consumer – is one set doing better than the other in your area?
You can find out a lot about a bank through BankTracker besides how many bad loans they’ve made. Each bank’s profile, for instance this one for Centrix Bank, a business bank based in New Hampshire, also show the amount of deposits a bank has, the loans it has out, the capital it has and the value of the loans that are more than 90 days past due – a detail that may say the most about your local economy.
NOTE: Until the end of June, Rush Choma worked with Cochran at the Investigative Reporting Workshop. He is now at TRAC – which he describes as, “if you’re not an investigative journalism nerd and aren’t familiar with, it is short for Transactional Records Access Clearinghouse, a project of Syracuse University’s S.I. Newhouse School of Public Communications.”