Steven Pearlstein: Time to say no to bank consolidation
By Steven Pearlstein,
WashPost
Published: August 27
It was only two years ago that there was a spirited debate about whether to break up the country’s biggest banks so the government would never again have to step in and bail them out for fear that a failure would trigger a financial panic.
The White House and Republicans never liked that idea. Instead, they pushed through a less heavy-handed approach that capped the growth of the four largest banks, each of which now has more than $1 trillion in assets, while imposing on them slightly higher capital requirements to offset their “too big to fail” advantage in attracting capital and deposits.
Now the ink is barely dry on the Dodd-Frank Act and big regional banks, prodded by Wall Street dealmakers and analysts, are once again in merger and acquisition mode. And if regulators let it happen, you can bet your “Citi Never Sleeps” coffee mug that the next wave of consolidation will produce even more trillion-dollar banks in five years.
Taking the lead are two banks well known to Washingtonians — Capital One, which has struck a deal to buy ING, the online savings bank, and PNC, which has a deal to buy the U.S. operations of the Royal Bank of Canada. Both acquisitions would create banks with roughly $300 billion in assets supporting a wide range of financial services that will get even wider when boom times return.
(More here.)
WashPost
Published: August 27
It was only two years ago that there was a spirited debate about whether to break up the country’s biggest banks so the government would never again have to step in and bail them out for fear that a failure would trigger a financial panic.
The White House and Republicans never liked that idea. Instead, they pushed through a less heavy-handed approach that capped the growth of the four largest banks, each of which now has more than $1 trillion in assets, while imposing on them slightly higher capital requirements to offset their “too big to fail” advantage in attracting capital and deposits.
Now the ink is barely dry on the Dodd-Frank Act and big regional banks, prodded by Wall Street dealmakers and analysts, are once again in merger and acquisition mode. And if regulators let it happen, you can bet your “Citi Never Sleeps” coffee mug that the next wave of consolidation will produce even more trillion-dollar banks in five years.
Taking the lead are two banks well known to Washingtonians — Capital One, which has struck a deal to buy ING, the online savings bank, and PNC, which has a deal to buy the U.S. operations of the Royal Bank of Canada. Both acquisitions would create banks with roughly $300 billion in assets supporting a wide range of financial services that will get even wider when boom times return.
(More here.)
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