Bank Mergers Have Not Hurt Consumers, Top Regulators Say

Strategic Insights -

Top Federal regulators have come to the defense of bank mergers, saying that consumers have not suffered in the recent wave of consolidation in the banking industry. According to regulators, the evidence shows that after more than a decade of restructuring, banks have increased their credit offerings and expanded their product and service array. The regulators, including Ricki Helfer, chairman of the Federal Deposit Insurance Corporation, pointed to statistics that indicate the number of banking offices has actually increased, even as the number of banks has decreased.

Key Takeaways:

  • The Federal Deposit Insurance Corporation's chairman, Ricki Helfer, stated that banks have just as many offices as before, providing significant credit and a broader array of products and services.
  • Janet L. Yellen, a Federal Reserve Board Governor, noted that despite a decrease in the number of banks from 4,000 in 1980 to 4,000 fewer in 1994, the number of banking offices has increased from 52,710 in 1980 to 65,100 in 1994.
  • The number of automatic teller machines has skyrocketed, from 14,000 in 1980 to nearly 110,000 in 1994, according to Janet L. Yellen.
  • The merger of the Chase Manhattan Corporation and the Chemical Banking Corporation, announced in August, will form the nation's largest bank in terms of assets.
  • Representatives from the Federal Reserve Board, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation testified at a hearing of a subcommittee of the House Banking Committee to discuss the impact of bank mergers on consumers.
  • The subcommittee's chairman, Representative Marge Roukema, said the hearing was an attempt to examine the mergers in the context of the recently passed law to permit interstate branch banking, which goes into effect in 1997.

Statistics:

  • The number of banking offices has increased from 52,710 in 1980 to 65,100 in 1994 (Yellen).
  • The number of automatic teller machines has jumped from 14,000 in 1980 to nearly 110,000 in 1994 (Yellen).
  • The nation now has 4,000 fewer banks than in 1980 (Yellen).
  • The merger of Chase Manhattan Corporation and Chemical Banking Corporation will form the nation's largest bank in terms of assets, announced in August.

Sources:

  • Federal Deposit Insurance Corporation
  • Federal Reserve Board
  • Comptroller of the Currency
  • House Banking Committee
  • Wall Street Journal or other reputable news sources (no specific source cited in original text)