Bank Mergers

Is anyone here familliar with Robert Reich's theory on bank mergers? If I recall it goes something like this (short version):

1) Regional mega-banks have just about replaced local town sized banks.

2) Given James Buchanan theory on every organization acting in self-interest, these banks look to cater to very wealthy individuals, large firms etc. to the exclusion of mom and pop shops and individuals. They will take smaller folks as clients, but only for a premium (anyone seen an interest rate on a credit card under 10% in the past 10 years regardless of credit score?)

3) These banks have become so large that the FDIC reserve could not handle it if one, much less more than one in a domino effect, failed.

4) If a failure were to occur it would leave a credit vacuum in a large region of the country, and could destablize our credit markets for years to come.

Does this sound accurate? Is there more (or less) to the theory than I remember?

If so, imagine if you would the BoA/CS-Fisrt Boston-Fleet merger going through, and then through a series of bad investments, corruption and mismanagement the bank failing, leaving only one or at the most two consumer/ non-investment banks on the whole east coast.

If this goes through it'll be my fourth banking "partner" without me ever having to drive to a different building.

My local bank was acquired by Natwest, which was acquired by Fleet which also acquired another large regional bank in NJ (Summit).

It's great business for the signmakers.

This mega-bank would have to serve the little guy but it'll never be like the hometown bank. I don't know if the mega-bank will be financially stronger than the two individual banks are today.

I do know that people will lose their jobs as operations are consolidated.

fleetboston (parent company of fleet bank) has been acquired by bank of america.


the mergers continue

peace
david
:hippie: