Within a year after changes in the banking laws allowed banks to own branches across state lines, bank consolidation allowed about 25 percent of the banks in the United States to own over 50-percent of the banking assets. While this has led to a continued concern about the long-range effects the new laws will have on competition in the industry, the changes have yielded only a few effects on banking consumers.
The increase in online banks has led to many people being able to take out loans and obtain credit cards sponsored by banks in other states, without the need to visit their local branch. This has also led to many more defaults on credit card balances, as without the face to face meetings with bank employees, more people are more comfortable in ignoring warnings from lenders about their debt.
Additionally, with a credit cardholder living several states away from the lender, they have been slow to seek legal help in obtaining restitution on bad credit card debts. Today, there are many attorneys and collection companies working with interstate banks to help them protect their interests and go after those with defaulted credit card loans. Bank consolidation has also led to some confusion to consumers as to who actually holds the paper on their loans, especially if many different banking institutions were involved in a merger.
For example, one bank is swallowed up by another bank in the same state, which is then merged with an out of state bank. This bank may then be bought up by an even larger bank and the person that had been doing business with the first bank finds themselves under the rules of a bank, four companies removed from where they obtained their first loan. Home mortgages are one of the most common pieces of paper being sold to other banks and groups of investors, in spite of the bank's ability to conduct business across state lines.
Essentially, buying a smaller bank in another state, is one way a bank can increase it presence in that state without the added expense of opening new branches and fighting through the competition. When they buy the institution, they also buy their accounts and very few account owners will leave a bank when it is sold. They may have to order new checks with the new bank's name on them, but overall the average consumers will see little change.
The biggest issue is the way in which debt consolidators and a consolidation loan has affected changes in policies and charges levied by the banks for service, as well as charges for bad financial decisions. Bad check charges, deposit waiting periods and a myriad of other banking policies generally are allowed to be made provided the customer is notified in a timely manner, typically 30 days before the change takes place.
Although competition among larger banks may remain high, customers often have little recourse but to accept the changes as part of the banking life with little or no input into how the changes are going to affect them on a personal level.
