As I write this, the FDIC (Federal Deposit Insurance Corporation) has seized Washington Mutual and it has been subsequently bought by JP Morgan Chase. The failure of Washington Mutual represents the largest bank failure in the history of the world.
Washington Mutual (WaMu for short) had $307 Billion in assets and $188 Billion in deposits. But note that the deposits are safe – in fact, customers can perform their regular banking in the morning. It will be a fairly seemless transaction, but it’s expected that many branches will close in the future as there will certainly be some overlap in branch territories. With the acquisition, JP Morgan Chase now has over 5,000 bank branches in the US over 23 states.
You may be surprised to learn that 40 banks have failed in the US since October 1st, 2000.
So while many people are drawing conclusions about Canadian banking prospects, keep in mind that we’re dealing with completely different worlds here. Only two small banks in Canada have failed since 1923.
That’s because for Canadian Banks, in return for being granted a non-competitive monopolized financial landscape with no chance of losing money unless incompetently managed, they provide consumers with high rates, lack of service and no desire to innovate.