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FT: Consolidation Looms for America's 5,600 Banks

FT: Consolidation Looms for America's 5,600 Banks
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By    |   Wednesday, 23 May 2018 02:09 PM

While America boasts more than 5,600, some nips and tucks and trimming reportedly just may loom for the nation’s financial industry.

And the regulatory rollback passed by Congress this week is one of several spurs to banking mergers and acquisitions, the Financial Times reports.

Deal activity in the sector has languished since the 2007-2009 financial crisis thanks to stricter rules on lenders with more than $50 billion in assets and aggressive enforcement of rules barring banks with compliance issues from expanding, Reuters reported.

Meanwhile, the FT predicted that the conditions for dealmaking look better than at any time since the financial crisis. Higher interest rates and lower taxes have pumped up bank profits, giving management teams stronger platforms from which to contemplate doing something radical.

The Federal Deposit Insurance Corporation said that net income across the banking industry rose 27 percent from a year earlier in the first quarter, to a record $56 billion.

Shareholder activists also have also begun to flex their muscles, calling for fresh ways to boost returns at Ally Financial, Comerica, Citigroup, Morgan Stanley and Regions Financial, among others.

Meanwhile, President Trump has slashed many financial regulations since taking office.

For example, Congress on Tuesday rolled back some of the restraints imposed on banks after the 2007-2009 global financial crisis, but big players like Goldman Sachs, Morgan Stanley and JPMorgan Chase, will not be breaking out the champagne.

While Wall Street banks lobbied hard for a range of provisions that would have weakened the 2010 Dodd-Frank reform law and boosted their profits, they got trumped by their smaller rivals, according to lobbyists, Congressional staff, bankers and disclosure records, Reuters explained.

For example, the bill reduces federal oversight of banks between $50 billion and $250 billion in assets, and eases lending, capital and trading rules for smaller lenders, but big bank lobbyists and analysts agree it does little to help the nation's largest lenders.

Large banks sought to raise that oversight threshold to $500 billion, or adopt a more flexible approach to big bank scrutiny, but small banks fought to fix the cap at $250 billion, concerned about alienating Democrats whose votes were needed to pass the bill in the Senate.

(Newsmax wire services contributed to this report).

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While America boasts more than 5,600, some nips and tucks and trimming reportedly just may loom for the nation’s financial industry.
banks, consolidation, us, ft, america, trump
371
2018-09-23
Wednesday, 23 May 2018 02:09 PM
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