With my column due today (actually, past due, with apologies to my editor), I was to have written the second part of last month's column discussing business succession planning. With apologies to my readers, I would instead like to circle back to a topic of several columns of the past year dealing with so-called "mergermania."
What prompts me is a recent column by William Safire called "Mergermaniacs Ignore Prudence, Put Public at Risk." Certainly, I do not wish to get into political debates or even the relative merit of Mr. Safire's columns. However, notwithstanding the very catchy title, I was struck by the impression of his column that evil could be defined in such night and day, black and white terms!
Mr. Safire's column reflects upon the recent legislative changes to the banking industry's so-called "fire walls" that separated banking, insurance and brokerage activities. His column indicates that this legislation "puts us all at extraordinary financial and personal risk."
In fact, I agree that a number of people may view some of this legislation with a wary eye. However, I was struck by the relatively unequivocal manner in which the entire legislation, particularly as it deals with "mergermaniacs," was described as evil and creating Depression-like risks in the banking industry.
I am always concerned when I read such columns for fear that it will unduly exercise those who may not be completely familiar with all of the background to the issue. For instance, many banking, legal and legislative experts agree that there are a number of extraordinary differences between today's world and economy as compared to the Depression era. Since much of the legislation that Mr. Safire objects to was driven by Depression-era facts and circumstances, it is somewhat disconcerting to so easily tar the new legislation with a broad brush without giving any consideration to these extraordinary differences.
For instance, today's global economy bears few similarities to the Depression-era times. One can debate these differences, but, in either case, differences exist. Again, while one can argue whether or not "megamergers" are good or bad (and this column has previously addressed some of those issues), it is noteworthy, for instance, to consider that none of the top ten banking institutions in the world are based in the United States! Waving the banner of fear of, as Mr. Safire puts it, "today's lust for global giantism [having] swept aside voices of prudence," is nearly unforgivable in light of how many global institutions dwarf those of the United States.
In fact, I would suggest that a far greater fear, if one is resolved to find fear in today's global economy, is that of foreign investment in United States' companies, whether banking institutions or otherwise. Likewise, while many, including Mr. Safire, have begun to draw parallels to the risks of the expansive banking legislation to the "S&L debacle," again it is almost unimaginable that such parallels could be drawn without noting the extraordinary differences between the two industries.
For instance, given the global economy and that the global economy will further integrate itself during the near future, we must consider what the alternatives are to the recent legislation permitting greater business latitude. Even today, the United States is nearly unique in its application of antitrust laws-notwithstanding that many believe that the antitrust laws should be more stringently enforced. On a global scale, our economy may be hampered by such regulations that many countries find completely foreign-excusing the pun. . . .
While all of these points can be debated vigorously, my concern is any one-sided, fear-inducing approach to an issue without giving credence to equally important and engaging opinions to the opposite. While the banking legislation providing significant opportunities for institutions in the banking, insurance and brokerage industries may or may not be the right approach, there are good reasons that such legislation should nonetheless be considered and, perhaps, even enacted as proposed.
Eliciting fear by reflecting that such an approach "ignores prudence," "puts the public at risk," will "create debacles," and that all efforts are the direct result of a "lust for global giantism," is to do a disservice to all of us and to this country's business community.
Personally, I am unwilling to lose sight of the value of a good debate. I am equally unwilling to allow the use of fear as the motivation in approaching any difficult issue without strenuous objection. Very few issues are as clear as the evil of Darth Vader! We have a valued market economy and legislative process. The current banking legislation, for instance, may or may not be perfect in everyone's eyes, but it certainly has merits and merits that are dictated by a very different world than the Depression-era laws that it revises.
Rich Drake is a Member of Womble Carlyle Sandridge & Rice, PLLC, practicing in the Corporate and Securities Group in Winston-Salem. Mr. Drake advises clients on practical approaches to achieve desired business outcomes in a variety of corporate, securities, financing and business technology matters.