Bank Reform: Should You Be Celebrating?

Wall Street is delighted now that banks, securities firms, and insurers can enter each other's businesses. But will small business be equally happy with the free-for-all unleashed by repeal of the Glass-Steagall Act? That depends, say banking and finance experts.

On the plus side: Competition should cut prices on everything from checking accounts to pension plans. Deregulation is also likely to spark a host of sophisticated products once offered only to large companies. "We'll see new types of loans and new insurance for small businesses," says Paul Merski, chief economist at the Independent Community Bankers Assn.

On the other hand, the new rules will probably spur a wave of mergers between remaining banks and financial companies, most of them already massive institutions. That might further dry up lending competition in areas where consolidations have raged for years. And everyone will suffer one consequence: The do-it-all companies will be pitching customers to supplement checking accounts with insurance or stock trading. That means--you guessed it--more telemarketing calls. "Competiton will force banks to go out to market and find who their prospects are," says James T. Daley, president of banking software firm PCI Services. When the phones start ringing, just remember: It's called "progress."

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