Could the Banking Giants Get Even Gianter?

Loosening the deposit cap could trigger further consolidation

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There's already great concern in the banking industry that the financial turmoil and the TARP could trigger massive consolidation that would work to reduce the number of smaller, community banks out there. But check out this nugget from today's Wall Street Journal:

While financial-services companies are braced for more-assertive government oversight, Mr. Schumer added that Capitol Hill's reworking of market rules could also give banks some victories. He said Democrats would be willing to consider easing limits that currently prevent banks from holding more than 10% of U.S. deposits after an acquisition. Any change to this policy could free up huge institutions such as Bank of America Corp., Wells Fargo & Co. or J.P. Morgan Chase & Co. to pursue more acquisitions.

This deposit cap is one of the few things preventing the banking giants from gobbling up additional competitors and getting even larger. If the Democrats do open the door on this issue, look for the consumer advocates and the community bankers to mount a wholehearted opposition.

JPMorgan Chase
Bank of America
Wall Street

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