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For all his knowledge about banks, Mr. Schafer has an embarrassing lack of knowledge of the law. Like Congress and the current administration he conveniently forgets the Riegle-Neal Act. Currently there are at least three big banks in violation of Riegle-Neal, which prohibits any bank from controlling more than 10% of the market. These banks have been in violation for four years yet no one has seen fit to prosecute them and enforce the law. In advocating for more bank mergers, Mr. Schafer walks a dangerous line that borders on endorsing illegal activity. I would hope this newspaper is not in the business of encouraging law-breaking. As the author of several pieces on Glass-Steagall who is in the process of completing a big on the Long Depression of the late nineteenth century I would be happy to explain Riegle-heal and its role in the current economic crisis in an opinion piece.
bralph--I would love to hear more about Riegle-Neal. Legality aside (not meaning to minimize it at all), this trend in banking is helpful to no consumer. It's especially injurious to small businesses, which have an increasingly tough time finding capital to run their businesses.
bralph- I would really like to hear more about Riegle-Neal but I have a lot of socks to sort and need to rotate my tires over and over again.
It's interesting to see the attitude that bigger is always badder. Like everything should be a small business. Try building cars that way. Try creating new pharmaceuticals that way. There are economies of scale. If it makes you sleep better at night, do everything you can to do business with only the little guy. But it'll probably cost you more in the long run. That's not to say that we don't need the little guy - we do. But not in all cases.
Small is Beautiful, by E.F. Schumacher, is must reading for everyone. This article on banking is foolish.
Capitalism is about self interest. These guys' concerns are about their self interest and their best buddies that make them money.
@bralph "...three big banks in violation of Riegle-Neal, which prohibits any bank from controlling more than 10% of the market." Unfortunately even if you trimmed enough size off of the largest 10 banks to place them WELL under Riegle-Neal, it doesn't address the primary point of the author's article. The point is that the burden of complying with yet more regulation is fast making it cost prohibitive for community banks to stay small. The economy of scale here is very real and will only get worse.
Eventually the goverment will pull its head out and see there are too few banks with too much control. Wells Fargo with over 30% of the mortgage market isnt a good thing. History does repeat itself. Sad.
"overnunder - It's interesting to see the attitude that bigger is always badder." -- Well I do seem to recall the bank bailouts that people were not happy with (but that did get paid back) went to only the big banks...they were deemed "too big to fail"...that should never be the case that any business is too big to fail.
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