Federal lawmakers are going to need to do something soon regarding the limits on how much deposit market share banks can take, whether the caps are increased or repealed altogether.
The financial crisis has essentially crippled most major U.S. financial institutions, moving regulators at times to encourage, with the help of federal assistance in some cases, healthier banks to acquire weaker ones.
But laws setting a 10% cap on overall U.S. deposits could stymie further acquisitions for the three largest banks: Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC). Until something is done about the deposit cap, these banks, all of which have recently made significant acquisitions, may not be able to do further opportunistic deals for some time, analysts say.
The moves could leave open potential targets for Goldman Sachs (GS) and Morgan Stanley (MS), both of which recently became bank holding companies and have publicly said that they are looking to garner deposits either organically or via acquisitions."Now that you have several banks approaching that 10% limit, my guess is they will lobby to make that change," says Mark Fitzgibbon, the director of research at Sandler O'Neill & Partners. Lawmakers will likely bump up the maximum national deposit share to 12% or 15% of total deposits, giving "plenty of breathing room for all the major players," he says. Until recently, BofA was really the only U.S. bank in danger of hitting the maximum deposit caps, especially after it acquired LaSalle Bank last year.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV