Let the Bank Takeovers Begin

There are over 8,000 banks, almost 2,000 Savings & Loans and 9,600 credit unions in the United States. That's too many. The largest are too large and the smallest too small. Failures occur at both ends of the spectrum. But the costs appear in different ways. Almost no one notices when small financial institutions fail. The cost of failure at the small institutions means nothing to most consumers. But we begin to panic when the huge financial supermarkets crumble, as Citicorp has done.

Fortunately, some of the huge banks have been led by conservative managements. Wells Fargo, for example. The financial crisis has hit Wells, but it will survive because its management stayed away from the activities that have harmed Citi and other financial institutions that have already disappeared.

However, it takes very little to upset the balance at the smallest banks. They are vulnerable due to their insignificant mass. Thus, the industry, consumers and taxpayers will benefit if small banks merge with their local and regional competitors.

In contrast to the US, Canada has six banks. That's it. Just six. Of course the population of Canada is only 34 million, compared with a US population of 305 million. If the US were to adopt the Canadian model, roughly 60 banks would operate here. That's probably too few for optimal service. But we have 20,000 banking companies, which is clearly too many.

Investor Wilbur L. Ross to Buy Majority Stake in Florida Bank

Jan. 16 (Bloomberg) -- Wilbur L. Ross will buy the majority shares of First Bank and Trust Co. of Indiantown, Florida.

The agreement allows Ross to acquire 68.1 percent of the shares in the community bank, subject to regulatory approval, Ross said today in a PR Newswire statement.