Is a Bank Too Big To Fail?

No matter how large a bank is, it can easily fail if it is not properly managed and regulated. The average CEO income for the largest banks is $28.8 million. While ordinary people feel that this amount of money is too much, the banking world finds that it is a reasonable amount. It is easy to see why Bernie Madoff and others were able to swindle millions of dollars from their clients and increase their own pockets. With bailouts and a crippling recession, many banks have failed. Small banks that have been around for 100 years have failed. Even larger banks have failed. So this makes us wonder, is your bank too big to fail?

Un-payable debts are crippling the financial world, causing many of the banks to deal with bankruptcies. Customers are unable to pay their debts, declare bankruptcy and start over. However, the money is rarely given back to the banks. Other customers end up paying for it in the form of high interest rates.

According to the AmericanScholar.org, “In 2011, Phil Angelides, chairman of the U.S. Financial Crisis Inquiry Commission, summarized the problem: “These banks are too big to fail. They’re too big to manage. They’re too big to regulate. They’re too complex to understand and they’re too risky to exist. And the bottom line is they offer very little benefit.”

So what can you do about your bank? The best thing you can do is to thoroughly research the bank before you choose to work with them. Look over the bank regulations and rules that they adhere to. Find out how long they have been in business and how they focus on providing customers with valuable service. What will they do if there is a financial crisis? How will they prevent a bank run?

Invest your retirement account with the right professionals. It is important to trust a good financial advisor that will provide you with regular updates about your investments. If you do not work with the right company, you can easily end up in a financial crisis, like the one that JP Morgan dealt with. One of the financial advisors we have researched is Lefavi Wealth Management. They have a solid track record of providing positive returns for their clients and they are trustworthy.

Banks have a long way to go before they can re-build consumer confidence. Since so many banks closed their doors in the past 5 years, it is a reminder to the American public to be careful with your money. Invest wisely, choose a trustworthy bank, and diversify your accounts. Keep your money market accounts at a different bank from the bank where you hold your savings and checking account. Use our rate comparison chart to find the best banks with high interest rates for your savings and retirement investing goals.