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ICBA Concerned Over J.P. Morgan Chase-Bank One Merger

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Washington, D.C. (April 15, 2004) - At a Federal Reserve hearing today, the Independent Community Bankers of America expressed strong concerns about the continued concentration of bank assets in the United States and the impact the merger of Bank One Corp. into J.P. Morgan Chase & Co. will have on consumers and small businesses.

Testifying at the Federal Reserve Bank of New York, Chris Cole, ICBA's regulatory counsel, said that large bank mergers often have an adverse impact on consumers. "We urge the Federal Reserve to examine closely the effect that this merger will have on deposit pricing and fees in areas where the merger partners overlap, such as in Texas and Florida, and whether consumers will be adversely impacted."

ICBA also urged the Federal Reserve to examine closely the effect the merger will have on small businesses, citing a recent Small Business Administration study that showed that small businesses receive less bank credit on average in regions where the large banks dominate. Community banks account for 34 percent of all commercial bank small business loans, which is more than twice the percentage share community banks have in total banking assets in the US.

J.P. Morgan Chase claims in its Federal Reserve application that over $20 billion of deposits in the state of Texas should be considered "national" deposits and excluded not only from any statewide analysis of the merger, but also in analyzing the impact the merger would have on the Houston banking market. If these deposits were included as local deposits, J.P. Morgan Chase would have deposits following the merger that exceed the Texas state deposit cap of 20 percent and would have a 46 percent share of deposits in the Houston market, which would be well above antitrust guidelines.

"ICBA hopes that both the Texas Bank Commissioner and the Federal Reserve will examine J.P. Morgan Chase's claim carefully," Cole said. "Large banks should not have the ability to re-characterize their local deposits as 'national' or move them to another state in order to comply with the state deposit caps or to resolve an antitrust issue." Cole also said that if divestitures do take place in Texas or in any other state, regulators should assure community banks an opportunity to participate in the bidding process.