ICBA - Publications - ICBA Testifies on J.P. Morgan Chase-Bank One Merger

ICBA Testifies on J.P. Morgan Chase-Bank One Merger

APRIL 16, 2004


ICBA Testifies on J.P. Morgan Chase-Bank One Merger

At a Federal Reserve hearing this week, ICBA expressed concerns about the continued concentration of bank assets in the United States and the impact the merger of Bank One Corporation into J.P. Morgan Chase & Co. will have on consumers and small businesses.

Testifying at the Federal Reserve Bank of New York, ICBA regulatory counsel Chris Cole said that large bank mergers often have an adverse impact on consumers. "We urge the Federal Reserve Board 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 the effect the merger will have on small businesses, citing a recent Small Business Administration study which showed that small businesses receive less bank credit on average in regions where large banks dominate. Community banks account for 34% of all small business loans, which is more than twice community banks' share of total banking assets.

J.P. Morgan Chase claims in its Federal Reserve application that more than $20 billion of deposits in the state of Texas should be considered as "national" deposits and excluded not only from any statewide analysis of the merger, but also from the likely impact the merger would have on the Houston banking market. If these deposits were included as local deposits, J.P. Morgan Chase's deposit share following the merger would exceed the Texas state deposit cap of 20% and its 46% share of deposits in the Houston market would be well in excess of 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 a state deposit cap or to resolve an antitrust issue." ICBA also said that if divestitures do take place in Texas or in any other state, regulators should take steps to assure community banks have an opportunity to participate in the bidding process.

For a full copy of ICBA's testimony, visit www.icba.org/pressroom.