Banking across State Lines: Public and Private Consequences

Banking across State Lines: Public and Private Consequences

Banking across State Lines: Public and Private Consequences

Banking across State Lines: Public and Private Consequences

Synopsis

With full-service nationwide banking on the verge of becoming a reality in the U.S., here is a thoughtful analysis of how it emerged and what its effects will be. Dr. Rose is frankly skeptical. He sees advantages but he also predicts significant disadvantages, mainly in the form of possibly higher fees and reduced personal attention for consumers of banking services. His book provides the best summary available of the research findings to date and one of the best summaries of new federal interstate banking rules enacted by Congress and signed into law in 1994. This is an important book not only for executives engaged in government-relations work throughout the financial services industry, and for those engaged in marketing and strategic planning, but also for public policy people in the private and public sectors.

Excerpt

Federal Reserve Board Chairman Alan Greenspan in a speech to the Conference of State Bank Supervisors in April 1994 observed: "I am often bemused when both foreign and American observers compare the U.S. and foreign banking structures, note the uniqueness of the American System and conclude that since the American banking system is so different it should be changed. . . . Our banking system is, in fact, the envy of the world, in part because of its ability to rebound from crises that may well have devastated more rigid banking systems."

Dr. Greenspan's statement is still true as far as it goes, but what he (probably unintentionally) left out of the story is that American banking is being inexorably pushed by economic forces and government regulations towards a system that looks increasingly like the British and the Canadians and most other banking systems around the world--a handful of dominating banks operating hundreds, if not thousands, of branch offices and affiliated businesses worldwide. Industry statistics tell the story: (1) the total number of U.S. banks has fallen in less than ten years from more than fourteen thousand to less than ten thousand; (2) the number of independently owned banks has fallen by more than 20 percent over the same period; (3) branch offices of existing banks have soared to more than sixty-five thousand and automated teller machines (ATMs) in stores and shopping centers now exceed one hundred thousand; (4) in only fifteen years, from 1980 to 1995, forty-nine states passed legislation allowing banking firms from other states . . .

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