o be sold off individually (Pacelle A2).
These new offerings by the thrifts and insurance companies fill a hole left in the market when the Resolution Trust Company (RTC) opted to stop selling large portfolios in 1993 because only a few heavily capitalized investors were competing in the market.
The actions within the thrift industry are balanced by actions taken by the government designed to stimulate activity. Changes have been proposed in bank regulations which would reduce potential future risks to the financial system. Such proposed changes include new accounting standards that would require institutions to value their assets at market, rather than at historical prices. Also recommended is that financially strong banks could increase their income amid increased competition by distributing equity securities and insurance. This broad step would require that the laws controlling the areas in which banks can participate (passed during the 1930s) be repealed, and would lead to a merging of the banking and securities industries (Bacon, "Bank Rules," n.p.).
There is also increased pressure to remove barriers to interstate banking. Mergers and acquisitions have led to holding companies which operate banks in several states, but true interstate banking remains prohibited. However, there is a bill pending in Congress which would permit banks to set up branches in multiple states, although not until three years after the bill is passed (Lipin, "Banks Bracing" n.p.). Such a move would greatly increase the amount of activity in the banking industry, and would likely result in larger corporate banking able to run their remote operations more efficiently than holding company structures permit.
Activity has also been stepped up at the Federal Reserve, which increased short-term interest rates in early February. There was debate among Fed members as to whether the increase should be only slight or great, and eventually increase...