Bigger certainly is not always better

As a result of the Depression and bank failures of 1929, banks were subject to rules and regulations and their operations were constantly reviewed and audited.

In Illinois, branch banking was prohibited.

We had neighborhood banks and savings and loan associations. Loans were made to people and businesses which were reliable and known.

If you wanted to buy a house you needed a steady job, good credit reference and 20 percent of the purchase price.

Local banks and savings and loan associations checked references and properties and the buyer had to demonstrate that he could pay off the loan. The same applied to commercial loans.

Then our elected officials changed the rules to allow branch banking and soon after that, the bigger banks swallowed up the local community banks and savings and loan associations.

Institutions such as Colonial, Stock Yards, Pullman, and Columbia banks, 1st Federal and Talman Savings and Loan were absorbed by the larger "downtown" banks and became removed from the communities they served.

Soon after this takeover, out-of-state and foreign investment groups began acquiring local banks and the race was on to make more money faster.

The cooperate greed of the "big" institutions took over; telephone solicitations and junk mail, credit was given to individuals with a poor credit histories, insufficient collateral or earning potential, which resulted in a high percentage of foreclosures and or bankruptcy filings.

Bundles of debt: Some high risk loans were sold to other institutions and soon the high risk loans started to fail and a financial crisis was in the making.

The consumer had no choice in who handled his or her investments or loans and the rules governing both were changed.

All of a sudden the house of cards started to fall and subsidiaries dragged down the parent institutions.

Bigger is not better. Tighter control of these institutions is needed.

John Culloton

Chicago