WASHINGTON -- Federal Reserve Governor Martha R. Seger on Thursday gave her personal endorsement to the concept of nationwide banking but warned about the concentration of deposits at large banks.
Small banks, despite controversy over full interstate banking, are likely to benefit from a legal change dropping barriers to interstate expansion, she said.
Mr. Seger said that curbs -- such as prohibiting mergers among the 100 largest banking institutions -- would be required to limit undue concentration of banking deposits. Among her concerns is the potential risk to the deposit insurance system.
"If there is a cutoff over which banks are too large to let fail, the growth of bank size through interstate mergers may increase the number of institutions for which market discipline is blunted by public policy concerns."
Mrs. Seger's …
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