Michael Blim
Banks have never been good to my family. My father’s father lost his life savings in a Depression bank failure. He lost his house shortly thereafter.
Three of my uncles worked for banks. They were Irish, or Scots-Irish, and their parents were cops, postal workers, and telephone operators. They were Irishmen who wanted to join the WASP world, and banks were their points of entry. All three made vice-president of their respective banks, but one was later fired, and the other two were forced to retire for health reasons.
They worked through the sixties and into the seventies in local Chicago and suburban Chicago banks. The banks weren’t small for their time, but they look like pygmies from the vantage point of today. Local banks were protected, and indeed my uncles were protected by Illinois law that until 1985 forbade “branch banking,” whereby a bank could operate out of multiple locations. The downtown, money-center banks stalked the local banks relentless, buying their shares privately, seeking confederates on their boards, and linking them to big loan syndicates. But the big banks couldn’t take over the local banks, and the local banks continued on servicing their local business communities and writing local mortgages that remained part of their asset portfolio. The local banks were dull, stable, and profitable.
Throughout the sixties and seventies, my uncles would warn me that branch banking was coming. The downtown Chicago money-center banks with their Fortune 500 clients and political influence, they said, were votes away from getting their way in state legislature. The spectacular failure of the Continental Illinois Bank, then the country’s 7th largest bank, in 1984, scared the state political class into granting limited branch banking in 1985. By 1993, state law provided that a bank could operate at an unlimited number of locations statewide. Federal law in 1994 opened up the country to unlimited branch banking. My uncles’ banks became branches of money-center and soon national banks, and each uncle left his bank, each in his own unhappy way.
Fifteen years later, America’s banks had become so few and so big that the government dared not let them fail.