The 2009 Bank Puzzle

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The banking industry has undergone a dramatic transformation over the past several years, remaking the face of Wall Street before our eyes. Hundreds of banks have failed, including Indymac, Washington Mutual, and Silverton Bank.

Citigroup, once hailed as the largest public company in the world by market cap, is now a shell of its former self. JPMorgan Chase, for all intents and purposes, has become the most influential and well capitalized major U.S. bank. After its acquisition of Wachovia, Wells Fargo is now one of the largest banks in the world.

Multiple acquisitions have weighed heavily on Bank of America, including the Countrywide Financial and Merrill Lynch deals. Despite boasting the largest pool of assets of any financial services company in the world, Bank of America is struggling to operate with its new size.

Regional banks have undergone a transformation as well. Back in October of last year, federal regulators forced the sale of National City Corp to PNC Financial Services (PNC) for $5.08 billion.

Goldman Sachs and Morgan Stanley emerged as the lone survivors of the major investments banks by become bank holding companies. Bear Stearns collapsed and was purchased by JPMorgan Chase (JPM), Lehman Brothers slipped into bankruptcy in September of 2008, and Merrill Lynch was swallowed up by Bank of America (BAC) soon thereafter.