I read an interesting article in the wall street journal comparing the current consolidation in the banking sector with much more gradual consolidation of Japan's banking sector after the collapse of it's real estate market in the 1990s.
The article seems dead on. The Federal Reserve is accelerating a banking consolidation that took much longer in japan.
It's interesting to note that Japan's consolidation cost $440B, while ours starts at $700B. I guess bigger economy, bigger costs.
I had always wondered how quickly our banking system would consolidate. For many years state and possibly Federal laws had made interstate banking difficult. With the gradual removal of those barriers banks like BofA began growing (and growing). however, the article notes that there are still thousands of small local banks and many mid-sized. The local presence is certainly a good thing.
I wonder though, do we need large nationwide banks to reduce the cost of interstate commerce and allow us to compete internationally?