NEW YORK (TheStreet) -- New information from the FDIC shows the four "too big to fail" money center banks still control the lion's share of assets in the banking system, which faces some pretty significant hurdles ahead. These challenges will make for volatility in the banking stocks, which provides ample trading opportunities.
The banking system's not out of the woods yet, as the largest banks remain too big to fail and still face tougher capital requirements. While it's slowly improving, as evidenced by recent willingness to make risky real estate loans to homebuilders, news of big fines on the banks and the potential for additional penalties has caused lots of up and down volatility in the stocks.
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According to preliminary third-quarter FDIC data secured from the FHFA, in total the four "too big to fail" money center banks control 43.4% of the total assets in the banking system. This is down slightly from 43.7% in the second quarter.
To break it down, Bank of America's (BAC) total assets declined 5.1% in the third quarter to $1.550 trillion, 10.2% of the total assets in the banking system. Citigroup's (C) total assets increased 0.7% to $1.379 trillion, 9.1% of the total assets. JP Morgan's (JPM) total assets increased 0.9% to $2.158 trillion, 14.2% of the total. Wells Fargo's (WFC) total assets increased 1.3% to $1.508 trillion, 9.9% of the total.
Meanwhile, a notable improvement in the banking system is a willingness to increase real estate lending to homebuilders and community developers. Construction and development loans rose by $11.6 billion in the third quarter to $310.6 billion, up 3.9%. This is helping homebuilders construct single family homes on speculation. Commercial real estate loans, which include multifamily construction, increased by $29.3 billion to $1.645 trillion, up 1.8%.
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