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The new destiny of big banks

A maintenance person cleans up in front of a Bank of America branch in Chicago, Illinois.

Kai Ryssdal: We've been trying to find bright spots in the economy all week, places to hang just a little bit of hope. Here's one, depending on how you look at it: At least nobody's really worried about a total collapse of the banking system anymore.

But all is not rosy. Bank of America and Citigroup are planning layoffs, while others -- like JPMorgan -- are getting by pretty well. Our New York bureau chief Heidi Moore has the 2011 installment of good bank/bad bank.


Heidi Moore: There is an old story about a man who ran into the angel of death and got scared. He ran to another city, only to find that the angel was waiting for him there.

Banks are a lot like that now. Bank of America, Citigroup and others can't outrun the mortgage crisis. They're fending off lawsuits and planning layoffs. Others, like JPMorgan, seem to be doing well, but they're delaying their appointments with destiny too.

Michael Yoshikami is a founder of YCMNET Advisors. He owns stock in some of the banks. He says he's happy the banks are off government life support, but they're still in denial.

Michael Yoshikami: The biggest assets that I worry about is the real estate portfolios. And it's not a new risk, but it's still a huge risk.

And just when you think the past will haunt banks forever, the future also doesn't look so great. Low interest rates are hurting them. Another recession seems likely. There's no more government help to bail them out.

Bill Isaac is a former chairman of the FDIC who's now at FTI Consulting.

Bill Isaac: I think people know that the banking system cannot indefinitely be better than the economy. The banks and the economy are inextricably intertwined.

No wonder Bank of America is laying off thousands. JPMorgan already did its big layoffs two years ago. Fewer people are employed in banking now than they were in 1999.

The era of the megabank seems to be ending quickly. We've gone from worrying that banks are Too Big to Fail to fretting that they're Too Big to Succeed.

In New York, I'm Heidi Moore for Marketplace.

About the author

Heidi N. Moore is The Guardian's U.S. finance and economics editor. She was formerly the New York bureau chief and Wall Street correspondent for Marketplace.

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