As 'Super Banks' Grow, So Do Analysts' Fears American Banker (08/07/00) Vol. 2, No. 5 p.1; Blackwell, Rob
Some banking-industry experts are concerned that
federal regulation of the industry has not kept up with the
sweeping changes in the past twenty years, during which time
community banks' share of deposits has fallen from a majority to
just 21 percent. Former Federal Deposit Insurance Corp. (FDIC)
Chairman William Isaac is concerned that regulators may not have
created "procedures and the expertise to deal with"
concentration, while L. William Seidman, who also once chaired
the FDIC, says "regulators are always behind the curve." Isaac
and Seidman both say that federal agencies might get sidetracked
by battles over regulatory jurisdiction while big banking
companies run into problems. However, both the Office of the
Comptroller of the Currency (OCC) and the FDIC say they are
prepared; the OCC says it looks at each of the 25 biggest U.S.
banks every day and has updated its exams, while the FDIC says it
has prepared contingencies for many situations, including failure
of large banks. Nonetheless, some in the industry say there
could be a problem with the FDIC Improvement Act of 1991's
"systemic risk" exception, which allows the federal government to
bail out large banks whose failure could hurt the economy; there
is concern that there are too many such banks. Independent
Community Bankers of America executive vice president Kenneth A.
Guenther is among those hoping the FDIC's soon-to-be-proposed
deposit insurance reforms take this into account.