Infographic: The US Banking Oligopoly in One Chart; The Roots of Too Big to Fail

How "too big to fail" (technical vernacular: Systematically Important Financial Institutions/Banks) US banks emerged as summarized  by the following infographic

First, a few remarks from the provider of the image Visual Capitalist

The “Big Four” retail banks in the United States collectively hold 45% of all customer bank deposits for a total of $4.6 trillion.

The fifth biggest retail bank, U.S. Bancorp, is nothing to sneeze at, either. It’s got 3,151 banking offices and employs 65,000 people. However, it still pales in comparison with the Big Four, holding only a mere $271 billion in deposits.

Today’s visualization looks at consolidation in the banking industry over the course of two decades. Between 1990 and 2010, eventually 37 banks would become JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup.

Of particular importance to note is the frequency of consolidation during the 2008 Financial Crisis, when the Big Four were able to gobble up weaker competitors that were overexposed to subprime mortgages. Washington Mutual, Bear Stearns, Countrywide Financial, Merrill Lynch, and Wachovia were all acquired during this time under great duress.

The Big Four is not likely to be challenged anytime soon. In fact, the Federal Reserve has noted in a 2014 paper that the number of new bank charters has basically dropped to zero.

From 2009 to 2013, only seven new banks were formed.

“This dramatic reduction in new bank charters could be a concern for policymakers, if as some suggest, the decline has been caused by increased regulatory burden imposed in response to the financial crisis,” the authors of the Federal Reserve paper write.

Competition from small banks has dried up as a result. A study by George Mason University found that over the last 15 years, the amount of small banks in the country has decreased by -28%.

Big banks, on the other hand, are doing relatively quite well. There are now 33% more big banks today than there were in 2000.

So zero bound rates helped shift the balance of the US banking landscape, viz the erosion of small banks in favor of "too big to fail" oligarchy 

Courtesy of: Visual Capitalist