U.S. banks are ‘swimming in money’ as deposits increase by $2 trillion
A record $2 trillion surge in cash hit the deposit accounts of U.S. banks since the coronavirus first struck the U.S. in January, according to FDIC data.
The wall of money flowing into banks has no precedent in history: in April alone, deposits grew by $865 billion, more than the previous record for an entire year.
The gains were all driven, in one way or another, by the response to the pandemic: The government unleashed hundreds of billions of dollars to bolster small businesses and individuals via stimulus checks and unemployment benefits. The Federal Reserve began a barrage of efforts to support financial markets, including an unlimited bond buying program. And an uncertain future prompted decision makers, from two-person households to global corporations, to horde cash.
More than two-thirds of the gains went to the 25 biggest institutions, according to the FDIC. And that was concentrated at the very top of the industry: JPMorgan Chase, Bank of America and Citigroup, the biggest U.S. banks by assets, grew much faster than the rest of the industry in the first quarter, according to company data.
“Any way you look at it, this growth has been absolutely extraordinary,” said Brian Foran, an analyst at Autonomous Research. “Banks are flooded with cash, they’re like Scrooge McDuck swimming in money.”