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Industry Analysis: The U.S. commercial banking industry was healthy in the mid-2000s, surviving the sluggish economy of the early 2000s and the 9/11-terrorist attacks. The consolidation frenzy of the commercial banking in the 1990s had slowed down drastically by the early 2000s. The total number of mergers and acquisitions that took place in 2004 fell to 226, compared to 475 in 2000. At the same time, the number of new banks established in 2004 dropped to 122, compared to 217 in 2000.

The number of commercial banks in operation fell down to 7,598 in the first quarter of 2005, down from 8,129 in 2002. Of the 5,743 state-chartered banks, 919 were members of the Federal Reserve System. These banks comprised about 12 percent of all insured U.S. commercial banks and held about 15 percent of all insured commercial bank asset. The 445 largest banks, those with assets of more than $1 billion--accounted for 87 percent of the banking industry's total asset base of $8.6 trillion (as of March, 2005) with the vast majority being controlled by the top 50 bank holding companies. Some of the functions of the Commercial banks perform U.S. economy are as follow, facilitate banks with the elastic credit system for steady growth, efficient transfer of money, they encouragement of savings for lending purposes, addition of credit to credit-worthy borrowers, increasing production and capital investment. facilitate trade through foreign exchange, they function as trust advisors, they facilitate safekeeping of valuables and provide brokering activities.

Numerous banks in the mid-2000s пÑ--Ð...continued to take advantage of the Gramm-Leach-Bliley Act--landmark legislation passed in late 1999, which allowed banks to engage in other activities, as long as they are financial in nature, by transforming their status from BHCs to financial holding companies (FHC).пÑ--Ð... Although only 600 in number in 2004, over half of the nation's largest banks (with assets in excess of $10 billion) had...



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