BANK WEEK ENDS

Just a few short comments.

1.  From a regulatory standpoint, the system is in good shape.  Query: do we have the right regulations?

2.  Whether correct or not there are a hell of a lot more regulations with which the banks have to deal.

3.  Regulations in every situation one can imagine will restrict or make more expensive any business.

4.  Regulatory applicability must be examined more closely.  Citibank and the First of Boot Hill belong to different holding companies.  They should be regulated differently.

5.  At the present, the industry is looking more like a bunch of utilities.

6.  What we have seen, as expected, has been the roll-out of plans to return excess capital to shareholders through increased dividends and share repurchases.  Is the repurchase of shares he best imployment of capital?

7.  The answer may be "yes."  Why?  A global economic expansion in developed countries of less than 2%', substantial regulatory limits on the use of capital, substantial reduction on the ability to trade for one's own account, reduction in international business (Big Danny Lives!), increased competition from a mostly unregulated shadow banking business and, yes, the continued advancement of artificial interest rates.

An aside.  Interest differential lending in the corporate sector was never a particularly attractive business, hence the increased emphasis on retail and credit card exposures both of which, however, from a risk standpoint are greatly affected by overall economic conditions.  Enter off balance sheet activities leading to, for example, the creation of assets for resale and the distribution of the same.  But this being the case, under present conditions big is going to be waaaaay better so expect to see a decline in the number of community banks in the future.  Let's hope we see banks in the future.