The idea that the fed can craft a perfect formula is just absurd. At the end of the day, they have a clause that will not affect a smaller bank, but that is exactly what it will do. The merchants won't take smaller banks' cards. The community banks will get hurt again.

I don't think the government has any business fixing prices in the market place and this is just unworkable.

TheStreet: How's the Long Island Economy?

O'Brien: It's reasonably OK. Unemployment is still an issue and property taxes are a related issue, because high property taxes serve as a damper on the value of homes.

You have a couple of banks in our market with late-stage credit problems, but the market is OK and as you get into the New York City area, Manhattan is reasonably firm and the outer boroughs a little weaker.

TheStreet: Deposit gathering in Nassau and Suffolk is dominated by JPMorgan Chase, Capital One and Citigroup. What advantage do the smaller local players have over the big banks, in your market?

O'Brien: The big advantage local banks have is that we tend to be more hands-on, more responsive and for most of the client base, we can provide the same level with commercial credit facilities the large banks can. They know us.

The general responsiveness and familiarity with the staff are attractive to a lot of commercial customers.

TheStreet: And after the merger is completed?

O'Brien: It will be all the same people and facilities, and the bigger balance sheet will be a big help. Long island is still a higher-credit-demand market than more rural areas. We have customers that are family big businesses. Their credit needs can be significant. The company's still going to be at a size that retains responsiveness and familiarity. It's a good fit.

TheStreet: Where are the lending growth opportunities on Long Island, for the combined banks?

O'Brien: Long Island has a whole host of professional service firms, law firms and accounting firms, which are pretty good opportunities for us. Real estate is a good opportunity. Long Island has several different pockets of relatively high commercial density. There are substantial numbers of family owned businesses. Those are the best. P/> TheStreet: Where are the lending growth opportunities on Long Island, for the combined banks?

O'Brien: My sense is that it will create a little bit of a headwind. The economy's strong enough to get over it. In the normal course, we should see interest rates start to come up a little bit, but it is not going to be a severe drag or severe jump in interest rates.


-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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