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Too Big to Fail

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Bye-Bye, Bad Loans, Hello Big Bank Stocks

Sometimes, size really does matter. During the financial crisis the US government declared that 19 financial institutions were systemically important, or “too big to fail.” And they backed it up with the $700B Troubled Assets Relief Program (TARP). As a result, those 19 institutions can now benefit from a view that they have an implicit US Government guarantee. That perception lowers their risk profile and borrowing costs, delivering an immediate implied subsidy of as much as $83 billion a year.[1] The six largest banks control 67% of all U.S. banking assets, and Bank of America accounted for about a third of all business loans by itself last year. If these institutions were “too big to fail” back in 2008, then now they may be “too colossal to collapse.” And that could be a gigantic advantage. See more
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Invest in Thematic Portfolios
Create your own customizable basket of up to 30 stocks or ETFs for just $9.95.
Motif Index 1 YR Return
Too Big to Fail Benchmark
With this Motif, you can buy the following basket of stocks for just $9.95:
Weight Segment & Stocks Symbol 1 MO / 1 YR Return
52.2% Retail Banks 10.0%
19.0% Wells Fargo & Company WFC 13.7%
13.1% U.S. Bancorp USB 3.4%
6.2% Capital One Financial Corporation COF 12.8%
5.5% PNC Financial Services PNC 13.0%
4.3% BB&T Corporation BBT 6.0%
1.1% SunTrust Banks Inc. STI 1.1%
1.0% Fifth Third Bancorp FITB 9.0%
1.0% Regions Financial Corporation RF 10.9%
0.9% KeyCorp KEY 18.1%
30.9% Financial Conglomerates 9.0%
17.6% JP Morgan Chase & Co. JPM 3.1%
5.3% American Express Company AXP 12.6%
4.9% Bank of America Corporation BAC 17.5%
3.1% Citigroup Inc. C 23.3%
9.2% Investment Banks 21.8%
6.5% The Goldman Sachs Group Inc. GS 20.6%
2.7% Morgan Stanley MS 24.8%
5.8% Custodian Banks 12.2%
3.8% The Bank of New York Mellon Corp. BK 7.9%
2.0% State Street Corporation STT 20.4%
1.9% Insurance Providers 15.5%
1.0% American International Group Inc. New AIG 11.8%
0.9% MetLife Inc. MET 19.7%

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