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If 'Too Big to Fail' Banks Fail, We'd Be Greece (Correct)

(Corrects article originally published earlier Wednesday to change $900 billion to $900 million and $675 billion to $675 million.)

NEW YORK (TheStreet) -- The financial health of the four "too big to fail" banks are the key to the U.S. economy as our nation faces the continued debate on the debt ceiling and the failed monetary policy that will soon be led by the presumed next Federal Reserve chairman, Janet Yellen.

Last Friday both JPMorgan Chase (JPM) and Wells Fargo (WFC) reported their third-quarter earnings.

JPMorgan, which closed Tuesday at $52.31, actually lost 17 cents a share, but after adjusting for $7.2 billion in legal fees it beat EPS estimates by 14 cents earning $1.42 per share on revenue of $23.9 billion. With such a huge balance sheet a "too big to fail" bank can just about report earnings at will given its great team of accountants. JPMorgan also disclosed it set aside $23 billion for expected future fines and settlement legal fees. JPMorgan expects to lose money on its mortgage operations in the second half of 2013.

Wells Fargo, which closed Tuesday at $41.54, beat EPS estimates by 2 cents earning 99 cents a share. Their earnings were boosted by a $900 million reduction in reserves for losses, but the bank reported that revenues from their mortgage origination business fell by 35% year over year in the third quarter.

Citigroup (C) reported its quarterly results in the premarket on Tuesday. Citi missed EPS estimates by 4 cents earning an adjusted $1.02 per share. Revenue at $17.9 billion was shy of expectations. The bank reduced loan loss provisions by $675 million.

Bank of America (BAC) reports its quarterly results premarket this morning. Bank of America is expected to report that it earned 18 cents a share. This stock was downgraded to hold from buy Tuesday morning, according to ValuEngine.

The "too big to fail" banks began their growth spurts after the Glass-Steagall Act, also known as the U.S. Banking Act of 1933, was declared no longer appropriate by President Clinton in 1998 after the Federal Reserve approved Citibank's affiliation with investment banking firm Salomon Smith Barney.

Beginning in the year 2000, the four 'too big to fail' banks began their dramatic growth through acquisitions.

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