Well how about that: Banks have more money than ever before

By Dian Vujovich

The word to read again and again in that headline is “ever” because for the first time in history, there’s so much money in U.S. banks that if a financial crisis, like the one in 2008, were to occur today these institutions wouldn’t need to be bailed out.

So how much is more than ever?

According to a September study by The Clearing House Association, our financial institutions have come out of the global financial crisis with over $1.5 trillion in capital— the highest capital level in history.

Yes, that’s good news.

But it’s bad news, too. For openers, these bailed out banks were supposed to lend out some of monies received. They really didn’t do that electing instead to shore up their balance sheets. Which makes sense and is appropriate up to a point. More on that later.

Additionally, these same very rich bailed out institutions have also gotten into a more fee trend tacking on fees for their services that aren’t simply nickel-and-diming customers today, but dollar-nicking them.

A friend, who lives in Indiana, told me yesterday that she’d taken her paycheck to a Chase bank to have it cashed. The convenience fee for doing so was $6 because she didn’t have an account there. Makes one wonder what kind of convenience that is and for whom—certainly not her. Then again, banks aren’t the only companies hyped-up on fees these days. This same friend said AT&T chares $5 when paying a bill with cash. OMG!

Back to the banks.

The title of the Clearing House study pretty much says what everyone who isn’t a banker is wondering, “How Much Capital is Enough?” After all, banks are supposed to serve us, the public. While they need to be smart about the assets they bring in and the use of them, there comes a point when they have enough money to run their various businesses.

So while that study looked at the capital levels of 123 large global banks and found them to have plenty of capital available, FDIC’s research shows that U.S. banks with more than $10 billion in assets have increased their Tier 1 capital by 50 percent. (Tier 1 capital is considered the safest by bank regulators and made up of things like reserves and equity capital.)

According to a USA Today story, top banks currently have $100 of capital safely to support every $1000 of loans and the costs of other customer services. There are industry experts, however, who would like to see banks set aside more as in $120 to $140 per $1000.

Unfortunately, the more banks set aside to cover their own business costs, the less customers and business owners can get their hands on. And that translates into things like less business, less productively and less economic growth. None of which America needs at this point in time.