A new study published in The Journal of Finance finds that neighborhoods affected by bank consolidation are subject to higher interest rates in the future, diminished local construction, lower real estate prices, and an influx of poorer households. The lack of competitiveness in the local loan markets results in lower commercial real estate investment and a drop in real estate prices. This causes unemployment to rise alongside an influx of lower-income households. Consequently, there is an increase in property crime within the affected neighborhoods.
The article’s authors applied their results to the FBI’s national crime figures from the Uniform Crime Reports and found, “…a mean decline in banking competitiveness due to mergers from 1992 to 1995 is associated with approximately 24,300 more property crime offenses over the period 1995 to 2000.”
The poorest neighborhoods are found to suffer the greatest increases in crime following bank mergers. The authors maintain that bank mergers should be carefully regulated to prevent economic deterioration of the affected neighborhoods.
From Blackwell Publishing
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This is the first sight that I’ve come across so far that has allowed any kind of comment on what’s happening with our failing bank system. I’m not a homeowner myself, but I believe that another area that needs to be addressed is in the area of credit and credit cards. Due to minimal job security (and minimal pay), being a full time student, and a reservist (also minimal monthly pay), bills, tuition, books, and the fact that I have to support my brother (who is a minor), I was forced to rely on my credit card on several occasions. This placed me in a financially tight spot with very little wiggle room. With finance charges accruing, it made my position even more difficult because they kept placing me over the limit. Sure I should have been more mindful of my position, but as human beings it is natural to think of the here and now. I worked with the collections department and finally managed to get my credit balance down to where it needed to be to keep my head above water. In the past few weeks, though, my credit card company merged with another bank. I know that my credit it not fairing so well because of this ordeal but it just became worse. Even though my credit balance with the card company is now in good standing, the new owner of this company didn’t think it was good enough, decided I was too much of a liability, and closed my account. I still have to make monthly payments, but this will make my overall credit go from not so good to really bad. In the letter that I received from my credit card company they said the reason for it being closed was because it IS over the limit, when clearly my statement shows that it IS NOT over the limit. When I called them to get an explanation, the customer service representative claimed that it was because my account had been over the limit several times. Why couldn’t they have put that in the letter? Clearly their choice of words does not perpetuate a justified reason for closing the account. And now, the only thing that the credit bureaus are going to see is that my account was over the limit and I was considered a liability. Which is not true. Even though the banks are trying to help other banks out of a bind, the little person on the sidelines still has to bear the weight of it all. Even the ones that are struggling but are trying to do best by them. They just made me look like a complete dirtbag, and just lied to the credit bureaus to save themselves!