Citigroup Inc. (C), Wells Fargo & Co (WFC), Bank of America Corp (BAC): Can the Big Banks Be Trusted?

You had these departments that were set up to be able to handle that small amount of activity, then all of a sudden you had the financial crisis, and you had 4x, 5x, 10x the amount of non-performing loans you had to deal with, with foreclosures you had to deal with, with near-foreclosures you had to deal with. I don’t think that they built out — or they had trouble building out — those departments fast enough to be able to handle all of that.

I think you get some shenanigans, some bad things happening, just from the fact that people were overwhelmed. The organizations are overwhelmed and they can’t handle all that. They couldn’t handle all the activity at once.

Now I think we’re going to start to see that minimized because you have the number of foreclosures coming down, the number of non-performing loans coming down. Meanwhile, you have these now built-out big foreclosure-dealing-with departments.

That’s part of it, but what I was getting to is the value proposition at a bigger bank, for a consumer, can be pretty compelling. When you think about the cross-selling at Wells Fargo & Co (NYSE:WFC)… six products in a Wells Fargo household.

A lot of smaller banks, maybe a lot of credit unions, they can’t offer — or they don’t offer — all those different products. In that case, you’ve got your bank account one place, maybe if you’re a small business owner you’ve got an individual 401(k) somewhere else. You’ve got your credit card somewhere else. Maybe you’ve got an auto loan from somewhere else.

Whereas, if you’re at Wells Fargo & Co (NYSE:WFC), you can get them all in one place. On top of that, you can know that pretty much anywhere in the country you go, you can find a Wells Fargo ATM. And on top of that, you know that if somebody writes you a check, you can take out your mobile phone, take a picture of that check, and deposit it in your account.

That’s one of the big advantages of the big banks, one of the advantages of the scale, is that they offer more. More locations, and they have more ability to invest in technology, too.

The article Can the Big Banks Be Trusted? originally appeared on Fool.com and is written by Matt Koppenheffer.

Matt Koppenheffer owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, and Wells Fargo. 

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