The New York State Banking Market Becomes Even More Competitive

July 29, 2021 at 8:54 am Leave a comment

The metropolitan area is about to get another aggressive financial institution.

Crain’s New York Business is reporting that Rhode Island based Citizens Financial Group agreed on Wednesday to buy Investors Bank of New Jersey for $3.5 Billion. The move comes just two months after the bank purchased HSBC’s New York branches. A couple of quick thoughts about this news:

First, the announcement reflects one of the most important debates we will see play out in the coming years between those who believe that the NYC is bound to bounce back to its former glory if and when the pandemic fades away and those who believe that the pandemic has accelerated a fundamental shift in when and where work gets done. Put me in the latter group. Why in God’s name are companies going to be willing to spend money on renewing leases when their employees have demonstrated that they are happier and just as productive working from home?

Secondly, I’ve said it before and I’ll say it again: community banks love to criticize credit unions but the interstate banking laws passed during the Clinton administration triggered a business model under which banks such as citizens have to grow at a frenzied pace in order to remain competitive. Along the way they snap up smaller competitors resulting in fewer consumer options and making it even more difficult for credit unions and traditional community banks to remain viable.

The Fed Begins The Taper Dance

The Fed released this statement at the end of the two day meeting of its open market committee. Individuals who specialize in scrutinizing these statements with about as much intensity as biblical scholars scrutinize the dead sea scrolls see signs that the Fed is laying the groundwork to reduce its bond buying program by the end of this year.

Remember the last time the Fed went through a similar process then Chairman Bernanke’s statements triggered a short but dramatic rise in interest rates which by some estimates added as much as $200 a month to 30 year mortgage payments. This time the Chairman is breaking the news as subtly as possible.

As summarized by the Wall Street Journal, “Some officials are concerned that a burst of inflation this year from bottlenecks associated with reopening the economy will prove more durable than previously anticipated. These policy makers are eager to start the taper, in part because they and their colleagues have said they aren’t likely to consider raising interest rates until they are done tapering the asset purchases… Another camp thinks recent price pressures will subside and could leave the Fed in the same position it faced for much of the past decade, during which global forces kept inflation below 2% even with historically low interest rates. They are worried that accelerating plans to wind down the asset purchases could raise questions among investors about the Fed’s commitment to achieving its economic goals.”

On that note, enjoy your day. Remember that the Yankees have an afternoon start today if you want to listen to the game over your lunch hour.

Entry filed under: Economy, econony, New York State. Tags: , , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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