Is a bank with trillions of dollars in assets, not to mention huge off-balance-sheet obligations, truly manageable, even by a smart guy like Jamie Dimon? History -- and this week's trading snafu -- suggest not.
Economies of scale, so attractive in many businesses, may top out above a few hundred billion dollars in assets. And the biggest banks tend to take on huge risks that smaller institutions avoid.
JPM Total Assets data by YCharts
Return on assets, one of the best measures of a bank's management prowess, suggests that the biggest aren't the best, with JPMorgan (JPM), Bank of America (BAC) and Citigroup (C) consistently underperforming.
JPM Return on Assets data by YCharts
Wells Fargo (WFC) and U.S. Bancorp (USB) are huge, too, but less so and have focused their businesses on serving consumers and companies, and haven't as aggressively pursued investment banking and trading, two more volatile lines of business.
WFC Return on Assets data by YCharts
We already know from the recent financial panic that huge banks are bad for taxpayers, who had to bail them out. But the size also seems to work against managements.
From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.
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