The Banking Blob

With the news of bail outs, bank failures, congressional deals, and McCain's (to borrow from Barney Frank) "Hail Mary" (which looks like it will work about as well for him as for USC last night...), I've noticed that the significant and troubling conglomeration in the banking industry hasn't been exactly front page news.

Washington Mutual (which now ought to change its slogan to "D'oh!" from the pleasantly optimistic "Woohoo!") has been taken over in part by JP Morgan Chase (the company that took on Bears Stearns). This not only vaults them into second place in the Battle for the Biggest Bank, but gives JP Morgan Chase a great deal of retail banking outlets in the West (most of their branches at the retail bank level are in the Northeast). WaMu was one of the largest retail banks.

The biggest bank is still Bank of America, which recently got bigger by acquiring Merrill Lynch. There are still rumored to be several mergers and acquisitions being talked about behind closed doors. I doubt we've seen the last round of consolidation in the banking industry.

The question is, what does this mean? How will this affect normal people? I'm always wary of corporate consolidation; banks getting bigger and bigger seems to me a counter-intuitive move when weighed against recent events. JP Morgan Chase's purchase of some of WaMu's assets did save the FDIC some serious money, though. Who knows? And that, my friends, is the real crux of the problem for me. Who, indeed, knows what the best course of action is? If consolidation of the banking industry gives one pause, then the further consolidation of executive power (particularly in the Department of the Treasury and the Federal Reserve) that President Bush is advocating should as well.