Myths vs. Facts - Large Banks

The recent financial crisis has resulted SETTING in a large number of questions and misinformation about U.S. financial institutions and their ability to support economic growth. In reality, U.S. banks are more capitalized and secure than ever before, contributing to the growth of large and small businesses and, thus, an increasingly global economy. THE RECORD STRAIGHT: Large Banks Mythsvs. Facts MYTH: FACT: Big Banks Have Dangerously Low Levels of Capitalization The top 25 banks' tier-one capital ratio is at a historic, all-time high of: 2007 2012 +8.1% +12.8% An Increase of $442 BANK BILLION in capitalization since 2007 How It Helps: U.S banks currently have a much larger buffer to absorb unexpected losses than they did during the crisis. More capital means U.S. banks have a much larger buffer to weather future economic downturns. MYTH: FACT: Banks are holding back the economy by refusing to loan to small and large businesses. Domestic business loans increased five percent since the end of 2011, reaching $2.1 trillion in the second quarter of 2012, which is equal to pre-recession highs. 2nd Quarter 2012 $2.062 TRILLION For Lease in domestic business loans An increase of 5% since 2011 se For Lease The average loan size is approximately $139,000 How It Helps: The majority of small business owners looking for a loan say their needs have been met. Financing needs are not holding back the economy, inaction on I the fiscal cliff is. For Lease MYTH: FACT: Our banks are too big; we need to break them up. Our banks are appropriately scaled to serve their clients in a global economy. Legislation passed since the financial crisis ensures there is appropriate oversight of the industry and has put mechanisms in place to carefully wind down banks that do fail. ANK U.S. Banks Not As Big As Most Assets as a percentage of GDP held by the 5 largest U.S. banks compared to the top five banks in other developed countries: 56% Of GDP 116% Of GDP United States Germany 149% Of GDP 179% Of GDP Canada Australia 309% Of GDP United Kingdom Large Banks Support an Increasingly Global Economy The growth engines of the U.S. economy are becoming increasingly global and as a result, non-U.S. revenue has increased by 14% for the Fortune 50 over the past decade. 2010 to 2011 change in portion of sales from abroad for fortune 50 corporations Companies Kraft 33% MetLife 27% 26% ConocoPhillips 26% Caterpillar DELL 23% Valero 22% Pfizer 21% GE 19% 18% Apple Microsoft 16% How It Helps: Large banks offer their customers products, services and infrastructure from multicity branch networks to global coverage that lowers costs for customers. They can afford to invest in technologies to help manage global supply chains and process transactions. With the growth engines of U.S. companies becoming ever more global, U.S. banks must be appropriately scaled to meet their needs. *NFIB. (2012). Small Business Economic Trends (July 2012). Retrieved from www.nfib.com Source: www.ourfinancialfuture.com