Still Another Bank Merger
The day's big story is another, yet another, big bank merger. NationsBank Corporation and Bank America Corporation are merging this time -- a $59.3 billion deal. And, Banc One Corp. is hooking up with First Chicago NBD Corp. -- A $29.8 billion sweetheart arrangement.
These two mega-deals follow the news last week that the humongous banking outfit, Citicorp, is merging with the huge insurance company, Travelers Group.
That deal increased pressure on other financial companies to step-up what is called consolidation. That's short for getting bigger.
Stock prices jumped up, generally, on all of these companies in all of these deals.
So, why should you care? Why should any American care. Well, reason one is that these mergers speed up, greatly accelerate the already breathtakingly fast makeover of this nation's whole banking industry.
What Congress is trying, and very quickly succeeding, in doing, is wiping out laws and regulations that prevent banks from getting completely, totally into the insurance, stock brokerage, and other brokerage businesses.
Congress, with help from the Executive Branch, and what are supposed to be watchdog agencies, is now wiping out as fast as they can, those safeguards which were designed to prevent another Depression.
In the great Depression of the l930s, Americans were faced with a financial crisis the likes of which this still new country had never seen before. Banks were at the center of it. The financial depression threatened the Constitution, people's belief in representative government, and the viability of democratic government and free-market economies.
In the Depression, Americans said: never again. Never again should we allow so much concentration of power and wealth in banksalone. A whole new system of checks and balances was instituted.
It held. It worked for over a half-century. Then came the l980s. Deregulation became the rage. And, in many ways, remains the rage today. Sometimes, one can say with accuracy, most times, justifiably so. There have been good results of some deregulation.
Banks have been contributing heavily to election campaigns, wanting to throw off what they see as the shackles of the Depression-era laws and regulations. The fruits of their many and large campaign contributions are now being harvested.
The checks and balances on banks, insurance companies, and stocks
and bonds outfits such as mutual funds are coming off. Pronto. That's the message of today's mergers, and of the government, including the Congress' rapid approval of them.
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