Mr. Chairman, thank you for calling this hearing. It is important for this subcommittee to fulfill it's oversight responsibility. The tendency is for Congress to rush in when we are facing a crisis and taxpayer's resources are being called upon. Congress should take a look at the banking industry when it is healthy and we can keep an eye out for trouble spots.
The banking industry is incredibly profitable - earning a record $52 billion in profits last year - and this year is on track to break that mark. Only 4% of the banks in this country are unprofitable which is amazing considering there are over 9,000 banks. Equally amazing is the fact that it has been over a year since a bank has failed.
The savings and loan industry is enjoying an equally robust period. The industry is on course to earn a record $7 billion this year.
But it is during these periods of prosperity that we must keep an eye out for trouble-spots. The ever increasing level of consumer bankruptcies and credit card debt are onerous signs. I don't believe there is a period in history where we have seen this kind of increase in bankruptcies while the economy is so healthy. I will be interested to hear from our witnesses their explanation of this phenomenon.
I would also be interested in our witnesses perspective of the rapid pace of consolidation in the industry. In nevada, we have experience so much consolidation that a few out of state banks now control over 90% of the banking assets. Should we be concerned that the mid-sized banks are disappearing?
Additionally, these mergers have come with a great deal of disruption to the local economy. Several of these mergers could be used as case studies in business school in how not to consummate a merger.
I will also like to hear our witnesses discuss certain Banking practices that I find questionable. First, there is the ever increasing use of fees by banks on consumers - one report suggests there are 2so different kinds of bank fees. This may have reached a new low when a constituent of mine was charged $5 for cashing a check at her own bank. I understand that is now the policy at several institutions and I am deeply troubled by that.
As we all know, banks are marketing credit cards at Record levels. The increase in consumer bankruptcy cannot be helped by this flood of credit card solicitations. But to add insult to injury, credit card companies are now either charging customers for paying-off their credit card bills every month or, as we recently saw, they are cancelling their credit cards all together. Who would have ever thought you would get your credit card cancelled because you paid off your bill every month.
I am eager to hear from our witnesses and again appreciate your calling this hearing.
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