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Who Gains When Large Banks Merge? |
| Section: CURRENT ISSUES / ANALYSIS |
| Author: David B. Humphrey |
| Publication: The world & I online |
| Issue Date: 1/1/1993 |
| Size: 2,246 Words, 14,191 Characters |
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Recent public statements, particularly by Ross Perot during his run for the presidency, have cast a shadow over the future of the banking industry. Perot predicted: "Right after Election Day this year, they're going to hit us with a hundred bank [failures]. It will be a $100 billion problem."
Perot's day of judgment passed without event, but there are many who remain skeptical about the stability of the U.S. banking system. It is in this climate that the recent boom of mega mergers, like the one between Manufacturers Hanover and Chemical Bank, takes on added interest.
Mergers among large banks are supposed to ensure stability and reduce costs. The majority of banks costs arise for providing convenient offices, maintaining a safe place for savings, and clearing over $300 billion...
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... at which a problem bank is closed. These changes--incorporating internationally agreed upon risk based deposit insurance premiums, and new congressionally mandated bank closure rules--should better protect the deposit insurance fund and substantially reduce the probability of a replay of the tax payer financed bailout of failed thrift institutions and banks that occurred during the 1980s. vbcrlf
(812 of 14,191 characters)
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