From Top 50 to Out of the Picture

How many formerly famous banks have disappeared in only a generation! Of the 50 largest U.S. bank holding companies by assets in 1983, only eight still exist as independent companies. For those of us who have spent some time in the banking trade, reading the 1983 list is a sobering remembrance. Only 16% of these 50 once-prominent banks have survived; 84% have passed into memory.

It is hard to keep clearly in focus, as we think about business or investment strategy, how profound the change can be in a relatively short time. The bank trainee who was 23 years old at the time of our original list is now only 50--with perhaps another 15 or 20 years in the business to experience still more shifting of the foundations.

Our list displays the riskiness of banking and its pervasive consolidation over the last generation. Do we expect the risk or the consolidation to stop now? Or change direction in some surprising way? Note especially that the survivors are by no means the biggest institutions of 1983--only two of the top 10 and three of the top 20 made it to here.

The structures of the present to which we are accustomed seem so solid. But perusing this list should make us usefully reflect on the insubstantiality of institutions and get ourselves ready for more creative destruction, to use the celebrated term of Joseph Schumpeter.

As Schumpeter observed, "Economic progress, in capitalist society, means turmoil." And further: "Capitalism not only never is, but never can be, stationary."

We bid the "Memories" banks adieu and life goes on.

Pollock Bank Survival Pollock Bank Survival

Alex J. Pollock is a resident fellow at AEI.

Photo Credit:iStockphoto/DNY59

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Alex J.
Pollock
  • Alex J. Pollock is a resident fellow at the American Enterprise Institute (AEI), where he studies and writes about housing finance; government-sponsored enterprises, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; retirement finance; and banking and central banks. He also works on corporate governance and accounting standards issues.


    Pollock has had a 35-year career in banking and was president and CEO of the Federal Home Loan Bank of Chicago for more than 12 years immediately before joining AEI. A prolific writer, he has written numerous articles on financial systems and is the author of the book “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2011). He has also created a one-page mortgage form to help borrowers understand their mortgage obligations.


    The lead director of CME Group, Pollock is also a director of the Great Lakes Higher Education Corporation and the chairman of the board of the Great Books Foundation. He is a past president of the International Union for Housing Finance.


    He has an M.P.A. in international relations from Princeton University, an M.A. in philosophy from the University of Chicago, and a B.A. from Williams College.


  • Phone: 202.862.7190
    Email: apollock@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: emily.rapp@aei.org

What's new on AEI

image The Census Bureau and Obamacare: Dumb decision? Yes. Conspiracy? No.
image A 'three-state solution' for Middle East peace
image Give the CBO long-range tools
image The coming collapse of India's communists
AEI on Facebook
Events Calendar
  • 14
    MON
  • 15
    TUE
  • 16
    WED
  • 17
    THU
  • 18
    FRI
Wednesday, April 16, 2014 | 10:00 a.m. – 11:00 a.m.
Calling treason by its name: A conversation with Liam Fox

Join us at AEI as the Right Honorable Liam Fox sits down with Marc Thiessen to discuss and debate whether America’s intelligence agencies have infringed on the personal privacy of US citizens.

Thursday, April 17, 2014 | 4:00 p.m. – 5:00 p.m.
The curmudgeon's guide to getting ahead

How can young people succeed in workplaces dominated by curmudgeons who are judging their every move? At this AEI book event, bestselling author and social scientist Charles Murray will offer indispensable advice for navigating the workplace, getting ahead, and living a fulfilling life.

Event Registration is Closed
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.