Since 1980, there have been 7,000 bank mergers in the United States.
Just since December, the five largest mergers or acquisitions approved or announced involve some $500 billion of bank assets.
Good or bad?
Well, it certainly works out dandy for the bank bosses
The combined bigger banks pay their chief executive officers more.
But shares in banks that acquire other banks do no better than stocks of the average bank three or four years after the deal has been announced or completed, notes Richard Rosen, a professor of finance at Indiana University, Bloomington.
"Whatever benefits there are don't seem to be passed on to shareholders in the acquiring bank," notes the former economist at the Federal Reserve in Washington.
These findings from research by Professor Rosen and an IU graduate, Richard Bliss, are relevant to goings-on in Washington that could stimulate more mergers.
The House of Representatives is scheduled to vote this week on a bill that will, if passed, radically alter the financial and business structure of the United States.
It would abolish the Glass-Steagall Act, passed in the Great Depression. That legislation prohibited commercial banks from engaging in investment banking activities, such as buying and selling stock.
Or at least it did.
Regulators, new laws, and courts have weakened it over time.
Since early last year, for example, bank holding companies have either purchased or announced their intention to purchase at least 24 securities firms.
The megamerger announced last month between Citicorp and Travelers Group Inc. violates Glass-Steagall by mixing banking and insurance.
But, under the Bank Holding Company Act, the Fed can allow the merger to go ahead, requiring that after two years the combined $140 billion Citigroup divest itself of illegal operations.
Given an excuse, the Fed could not act for three additional years.
Citicorp and Travelers are pushing for the bill ending Glass-Steagall, HR 10. So are many securities firms, including Merrill Lynch, and some big banks such as NationsBank and BancOne. But Chase and most smaller banks are opposed.
Rosen suspects the bill won't pass.
"Too many campaign contributions involved," he explains. For some years, it has generated fat political donations from those in various financial industries seeking a legislative advantage.
Similarly, he says, Congress is wary of passing a law that might make enemies for them - say insurance salespeople or small-town bankers.
If the bill does pass the House, it must then pass muster in the Senate. It is not clear whether Alfonse D'Amato (R) of New York, chairman of the Senate Banking Committee, will push for action this year.
And Treasury Secretary Robert Rubin said Thursday he would recommend a presidential veto.
But should HR 10 get through, it will be the most important financial legislation in decades. It will tidy up the laws, making it fully legal for financial conglomerates to operate in banking, securities businesses, and insurance.
Proponents see this as overdue. They point to advances in information technology, globalization of the economy, and increasing competition between financial sectors. They forecast one-stop shopping for financial services.
But economists caution that much-touted economic efficiencies from mega-mergers may be hard to find.
Summarizing their research, Fed governor Laurence Meyer told the House Banking committee last month that mergers for banks up to about $10 billion to $20 billion in assets can create economies of scale. And mergers across states or regions can reduce risk by broadening a bank's geographic exposure.
But at big banks, savings and efficiencies are hard to find.
Another HR 10 provision would allow bank holding companies to buy commercial firms - retailers, manufacturers, etc. - until they reach 5 percent of their total assets.
The Fed doesn't like this provision.
"Such restrictions are simply not very meaningful in a world of giant financial institutions," Mr. Meyer noted. A $1 trillion conglomerate - already "on the horizon" - could buy any one of the nation's top 250 nonfinancial companies.
Consumer groups also dislike it.
Mary Griffin, counsel for Consumers Union, says banks could favor their nonfinancial affiliates with loans. That could hurt competitors. She also frets about "sheer economic concentration" - too much power in the hands of big banks.
Rep. Jim Leach (R) of Iowa, chairman of the House Banking Committee, has proposed an amendment to HR 10 killing the banking-commerce provision.
Ms. Griffin wants to see HR 10 add a "basic banking" requirement - low-cost checking for less-affluent customers. And she doesn't want national law to preempt state bank law, preventing legislatures from protecting consumers in such areas as automated teller machine fees.
There are many, many cats in this legislative fight and the squeals are loud.