By King, A. J.
American Banker , Vol. 149
To the editor,
Stephen A. Rhoades' paper on the effects of interstate banking ("Interstate Banking: No Big Threat to Small Banks," Oct. 11, papge 4) lays out a strong case for the survival of community banks. I agree wholeheartedly with his conclusion that small banks
CAn survive and prosper in a fully competitive banking market.
However, the key phrase in Mr. Rhoades' paper, and one that deserves to be highlighted, is that "this outcome will depend importantly on maintaining competitive local banking markets through the application of the antitrust laws." Many banking experts, including Federal Deposit Insurance Corp. Chairman William Isaac, believe that current laws are not only inadequate to prevent a significant increase in bank concentration but actually may favor the expansion of large banks.
Arnold Heggestad, who is the William H. Dial professor of banking at the University of Florida, favors interstate banking but argues that antitrust laws "would have no effect on limiting interstate expansion. Under current interpretations, the largest U.S. banks would be able to acquire banks that were dominant in their markets across the country with virtually no antitrust limitations."
Mr. Heggestad notes that if Bank of American acquired the largest banks in Texas and Florida, its share of U.S. domestic deposits would increase from 4.14% to 5.14% -- insufficient grounds for challenge under existing antitrust standards. …