Investors Beware, The 4 'Too Big To Fail' Banks Are Not Great Long-Term Investments

Mar. 13, 2018 8:46 AM ETBAC, C, JPM, WFC16 Comments
Richard Suttmeier profile picture
Richard Suttmeier


  • FDIC data suggest that our nation’s ‘too big to fail’ money center banks are ‘too risky to own’ now.
  • The Trump administration wants to ease banking regulations but what happened to the pledge to end ‘too big to fail’?
  • I will show reasons why the four biggest banks are also ‘too big to regulate’.

Bank of America (BAC), Citigroup (C), JP Morgan Chase (JPM) and Wells Fargo control (WFC) control 42% of the total assets in the banking system making them impossible to regulate.

Wall Street likes bank stocks due to rising interest rates by the Federal Reserve. However, the FDIC cautions that some banks have been reaching for yield in a low interest rate environment. The Federal Deposit Insurance Corporation in their Quarterly Banking Profile for the fourth quarter of 2017 warns that some banks have been investing in higher risk longer-term assets versus short-term deposits.

The FDIC cautions that banks must ‘manage interest-rate risk, liquidity risk, and credit risk carefully to continue to grow on a long-term path’.

Here are my issues with the four ‘too big to fail’ money center banks.

Bank of America (BAC) is simple to break-up by spinning off investment banking firm Merrill Lynch. There appears to be some sexual harassment issues in one business unit this banking giant.

Citigroup (C) is more difficult to break-up but when a major bank faces fines of $335 million for raising credit card rates on consumers who missed monthly payments, they are ‘too big to regulate’.

JP Morgan Chase (JPM) plans to open additional local branches putting more pressure on local banks. In addition, the largest bank is raising rates on credit cards for those making their monthly payments to offset losses from those who are not. Regulators should break up this monopoly into JP Morgan and Chase bank.

We know the problems at Wells Fargo (WFC) and their continued fraud against clients. They have been and will continue to pay fines, but why do they remain a primary dealer of the Open Market Desk of the New York Federal Reserve? Perhaps Wells Fargo should be forced to spin off Wachovia. The

This article was written by

Richard Suttmeier profile picture
I am the Founder & CEO at Global Market Consultants, Ltd. I consider myself as a Financial Engineer with an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. In 1972 I began my career in the financial services industry trading U.S. Treasury securities in the primary dealer community. I became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gave me the insights to be an expert on monetary policy, which I feature in my newsletters, and market commentary. I formed Global Market Consultants Ltd at the end of 1988 and expanded on my analysis to include proprietary analytics. While operating Global Market Consultants I was the U.S. Treasury Strategist at Smith Barney 1991 through 1995, was Chief Financial Strategist at William R. Hough in St. Petersburg, Florida 1997 through 1999, and was Chief Market Strategist at Joseph Stevens 1999 into 2008. I began covering U.S. equities in 1997 and began to use ValuEngine as my stock screening tool in 2002 before joining them as Chief Market Strategist between September 2008 and November 2014. I was the Chief Market Strategist at Niagara International Capital Limited between December 2009 and December 2014. In 2005 through 2007 I wrote columns on and authored Technology Report. My unique coverage called for the housing bubble to pop in 2005 and for regional banks to collapse in 2006 and early-2007. This is when my proprietary analytics became known as value levels at which to buy on weakness and risky levels at which to sell on strength. I became an Expert Contributor for in April 2012 and currently write one or two stories a day covering subjects such as: The housing market, community and regional banks, momentum stocks, earnings profiles both before companies report quarterly results and provide scorecards after reporting results. Many of my stories we include moving averages, momentum readings, analysts’ earnings estimates, and value levels and risky levels. Over the years I made frequent appearances on financial TV beginning in 1993 on CNBC covering the U.S. Treasury auctions and as a substitute for John Murphy on his segment called ‘Tech Talk’. I also occasionally appeared on CNN and Bloomberg. On almost every holiday I appeared for an hour covering stocks on a call-in / email-the-expert ‘Talking Stocks’ show on CNNfn. In 2002 I had my own show on Yahoo Finance TV called, ‘Traders’ Club with Richard Suttmeier’. When Fox Business began in late-2007 I was a frequent guest on ‘Money for Breakfast’. I also made appearances on Reuters TV, Yahoo Finance Breakout and BNN in Toronto. In recent years I shifted my focus to making presentations to various investor groups such as: MBA students at the University of Florida and South Florida, The American Association of Individual Investors, Wells Fargo Advisors, The Executive Form at the National Arts Club in NYC, Investors Roundtable of Wilmington NC, The Market Technicians Association, The Information Management Network when they cover Florida Banks in Ft Lauderdale, and the University of Tampa Investment Club. I was president of the Society for the Investigation of Recurring Events in NYC from 2000 into 2009. My background began on Long Island, New York. I graduated from Bay Shore High School in 1962, and was a member of the Honor Society, Golf Team, Math Team and Band. I graduated from Georgia Tech in Atlanta with a Bachelor of Industrial Engineering Degree in 1966, and was a member of Chi Phi Fraternity, the freshmen Golf Team, and was the captain of the Bowling team. I won the South East Regional Bowling Tournament in 1964 and won the National Intercollegiate Bowling Championship in the Doubles Event that same year. I graduated from Brooklyn Poly in 1970 with a Master of Science in Operations Research, Systems Analysis. My first job out of Georgia Tech was with Grumman Aerospace on Long Island 1966 through 1970 with project assignments on the Lunar Module and F-14 Tomcat Fighter Jet contract proposal. I was with Bank of New York in 1971, as the Senior Systems Analyst for computer applications for the Bank’s International Division. When I shifted my to Wall Street In 1972 I became a U.S. Government securities trader at Briggs Schaedle, a primary dealer where my father was Vice Chairman and my brother was Sales Manager. In 1977 I joined Loab Rhodes as a U.S. Treasury trader. Then my career advanced as noted above. I have been married to Linda since June 1969 and we are the parents of Stephen and Jason Suttmeier. Stephen has been married to Jennifer since 2004 and we have a granddaughter Emily and a grandson Robert. We have been living in Land O’ Lakes, Florida with Jason and his partner James since June 2009.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (16)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.