Treasury Secretary Janet Yellen says the banking sector is likely to further consolidate into larger giants as the sector continues to weather tough times.
This week, Yellen met with more than two dozen CEOs and executives convened by the Bank Policy Institute (BPI) to discuss the current state of the economy and President Biden’s economic agenda.
According to the treasury
“Secretary Yellen reaffirmed the strength and soundness of the US banking system, noting that it remains well capitalized with strong liquidity. She noted that decisive federal action taken in March by regulators and the administration to protect depositors helped bolster public confidence in the banking system and reduce financial contagion.
While Yellen appears to be projecting the strength of the US banking system, CNN quotes sources familiar with the matter as saying that the Treasury Secretary also discussed the possibility of bank mergers at the meeting.
According to CNN, Yellen told CEOs and executives that more bank mergers may be needed in the future.
Yellen’s comments come on the heels of JPMorgan’s big takeover of First Republic Bank, which collapsed last month before being seized by the US government.
JPMorgan Chase, the largest bank in the US, raised approximately $173 billion in loans, $30 billion in securities and $92 billion in deposits, both insured and uninsured.
Jamie Dimon, Bitcoin (BTC) critic and CEO of the bank, said:
“Our government invited us and others to step up, and we did… This acquisition benefits our company in a modest way overall, it adds to shareholders, it helps further advance our asset strategy and it complements our existing franchise.”
While Dimon and JPMorgan shareholders welcomed the acquisition, others were concerned about the increasing concentration of power in the industry.
Massachusetts Democrat Elizabeth Warren, who is also a staunch opponent of cryptocurrency, reportedly warned that JPMorgan’s size was becoming a potential threat to Americans.
“What happened here is because a bank was underregulated and went bankrupt, the federal government helped JPMorgan Chase get even bigger…
It may look good today with everything flying in the air, but in the end, when one of those giant banks, JPMorgan Chase, starts to fail, it’s the American taxpayers who are at stake.”
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