Remember those banks that the federal government bailed out because they were “too big to fail?” Well…after mergers and bank takeovers (some encouraged by the government) those banks bailed out because they were “too big to fail” now are much bigger. JP Morgan Chase and Bank of America combined now control more than 20% of all bank deposits in the United States.

It would be interesting to research this, but I would estimate that they constitute far more than 20% of the complaints about banks received by Consumerist. How does this affect you? As banks have fewer viable competitors, it becomes less likely that disgruntled customers will switch their banking to one of those competitors. This means less friendly customer service, stricter policies, and higher deposit-related fees. The Washington Post took a look at the current state of the nation’s largest banks and how they’ve changed in the last year.

In Santa Cruz, Calif., Wells Fargo, Bank of America and J.P. Morgan Chase hold three-quarters of the deposit market. Each firm was given tens of billions of dollars in bailout funds to help it swallow other banks.

The rest of the market, which consists of a handful of tiny community banks, cannot match the marketing power of the bigger banks. Instead, presidents of the smaller companies said, they must offer more personalized service and adapt to technological changes more quickly to entice customers. Some acknowledged it can be a tough fight.

Wells Fargo is “really, really good at the way they cross-sell and get their tentacles around you,” said Richard Hofstetter, president of Lighthouse Bank, whose only branch is in Santa Cruz. “Their customers have multiple areas of their financial life involved with Wells Fargo. If you have a checking account and an ATM and a credit card and a home-equity line and automatic bill payments . . . to change that is a major undertaking.”

Have you been forced to change banks due to a merger or failure? Do you feel that you could easily change your banking to a different institution if you experienced problems where you are now?

Banks ‘Too Big to Fail’ Have Grown Even Bigger [Washington Post]

(Photo: Earth2Kim)

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