The Washington Post and Los Angeles Times lead with Monday's big merger announcements, and everybody has lots of front-page and inside banking stories. The New York Times, which led with the mergers yesterday, goes with the looming high costs of the midterm elections. USA Today goes with the mysterious breakdown experienced by AT&T's "frame relay" data network, which is used by hundreds of multinational companies to handle such tasks as central database access and e-mail. The main effects the paper mentions are a reservations slowdown at Northwest Airlines and travel agencies' difficulties getting credit card authorizations.
The WP lead reports that the company emerging from the BankAmerica/NationsBank combine will command eight percent of all bank deposits in the U.S., close to the ten percent limit currently mandated by federal law. The Post notes however, that unlike last week's Citicorp/Travelers move, which challenges Depression-era laws barring different types of financial services from being offered by a single company, this bank merger is within the boundaries of current law, because in 1994, Congress allowed coast-to-coast banking. But, mentions the Wall Street Journal, Sen. Arlen Specter is contemplating legislation that would raise the hurdles to Fed approval of big bank mergers.
The WP reports that many bank stocks soared on the merger news, while the LAT identified more with customers and employees than shareholders, going high in its story with concerns that the BankAmerica/NationsBank deal would lead to higher fees and could eliminate 8,000 jobs. The NYT doesn't get to that latter bit of unpleasantness until the fifteenth paragraph of its bank story.
The WP breaks out a separate story about what the deal means to customers, dominated by wiggle-claims quoted from others like "bigger is not necessarily better when it comes to the accounts of individual customers" and "bigger banks do tend to charge higher fees." But USAT's news section cover story on bank mergers says it flat-out: "surveys show that big banks charge higher fees," and backs that assertion up with several data bullets.
A NYT op-ed makes the point that in light of these big bank mergers, the government should reconsider the consequences if one of the new monsters fails. Current law allows the government to completely protect depositors and creditors of banks considered too big to let fail. This policy ignores the lesson of the S and L crisis in the 1980s and of the current Asian imbroglio: the promise of complete protection contributes to bank failures by encouraging risky bank ventures. So, the piece argues, big account holders should have to personally bear some of the loss that comes from a failure. That would encourage them to monitor their banks more closely.
The NYT lead says that the upcoming midterm elections are apt to break spending records because candidates are buying television time far earlier than ever before. The trend is being attributed to Bill Clinton's 1995 decision to mount an early and intense television campaign. Another influence the paper cites is that of Steve Forbes, who became a major force in early Republican primaries by spending tons of his own money on TV ads. It's become obvious that politicians fear not having the campaign money far more than they fear any scandal caused by raising it. The paper notes that Alfred Checchi, a candidate for the Democratic nomination for Governor of California, began buying television ads just before last Thanksgiving for the primary vote this coming June. Checchi's standard, says the Times, promises to lead to the most expensive state election in history.
The WSJ "Work Week" column notes a simple position taken by the National Association of Manufacturers that could encourage high school students to take their classes more seriously: use high-school transcripts more in hiring.
The WP business section reports that a company that until now has sold its language-understanding software to the intelligence community for spy-detection is poised to sell a similar product designed to help the government and brokerage firms monitor the offers and promises made by brokers in communications with (potential) clients. The idea is that the program that once could pick out the needle of a phrase like "covert operative" in a haystack of e-mails has now been trained, says the paper, to do the same for "opportunity of a lifetime" and "so safe even my mother has it." Forgive "Today's Papers" for wondering--but how will this software catch brokers if it couldn't catch Aldrich Ames?