How Safe Is Today's Banking Sector?

We're more than four years past the Wall Street meltdown.

The big banks, Bank of America , Citigroup , JPMorgan Chase , and Wells Fargo , are in much better shape now than they were then. Capital is higher. Asset quality is better. Lending standards are tighter. Lessons have been learned and business practices changed.

But in some ways, today's banking system might be far more dangerous than it was before the financial crisis.

Why? Concentration.

Risks are now concentrated in a handful of megabanks. Come the next financial crisis, that could mean even greater risks to the financial system when just one bank screws up.

Last week I sat down with Mohamed El-Erian, CEO of bond giant PIMCO. I asked him how he feels about the health of today's financial system. Here's what he had to say.

The article How Safe Is Today's Banking Sector? originally appeared on Fool.com.

Fool contributor Morgan Housel has no positions in the stocks mentioned above. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase,, and Wells Fargo. Motley Fool newsletter services recommend Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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