August 24, 2012 The Partnership for a Secure Financial Future
FACT: Global economic growth and competition require larger financial institutions.
Our financial institutions must support a global breadth and scale of services. Consider, for instance, that U.S. trade volume has increased to roughly four times its 1992 level.1 Supporting this economic activity are a $10 trillion trade finance market and global foreign exchange activity that tops $4 trillion dollars a day2, of which more than $800 billion involves the U.S. dollar. That’s more than a ten-fold increase since 19863.
Large financial institutions are positioned uniquely to support U.S. companies engaged in the globalized economy, such as Wal-Mart (with $447 billion in annual revenue) and Apple (with $108 billion-a-year in revenue). These institutions provide access to capital markets, cash management, credit, foreign exchange, risk-management products, trade payments, investment products and other critical financial services.
U.S. banks are not the largest banks in the world by asset size and any action that shrinks them will reduce their ability to compete in the global market. Moreover, based on the size of the home-country economy – a more relevant data point from a taxpayer’s standpoint – the U.S. banking system is smaller and less concentrated than all G7 countries.
1 Bureau of Economic Analysis
2 Bank of International Settlements
3 Federal Reserve Bank of New York