Financial institutions with a long-term strategic interest in the credit card business should reap the benefits of the existing safe harbor and buy while it lasts. Those who don't should take advantage of the current environment and sell.
If very different lines of business are walled off from one another, conflicts of interest and risk can be mitigated without losing any of the benefits of one-stop banking.
When customers needed to access a branch weekly, the difference between being 5 minutes away and 20 minutes away from them was indeed a big deal. It is becoming less important by the day.
Incensed shareholders and lawsuits triggered by failed say on pay votes aren't the half of it. Just wait until the expected M&A wave unleashes 'say on golden parachute' litigation.
Prices garnered prior to the crisis have little in common with what banks are worth today or what they will likely be worth in the future. Yet boards and managers remain irrationally fixated on outdated, irrelevant valuations.
Laying the Federal Reserve Board's orders approving two recent acquisitions alongside Dodd-Frank rules and guidance from other agencies creates a Rosetta Stone to foretell future regulatory determinations.
One of the obstacles to an acquisition is that the offers never make it to the board. They tend to come first through the target's CEO, who stands to lose a job (and compensation) in any sale.
Is the tide shifting in favor of giving shareholders a greater voice in the critical arena of executive compensation, and will this extend to other areas of corporate management?
When do scale economies from growing bigger run out for community banks? And do our largest banks need to do trillions of dollars of business to compete internationally?
The performance numbers will likely reinforce the reality that, absent significant changes, many banks simply cannot attain the level of profitability needed to remain viable.
