The Banking Crisis Trickles Up

New York Times (09/30/08) P. C1; Dash, Eric
The crisis gripping America's banks took a troubling turn on Sept. 29 as financial shares plummeted 16 percent on one of the worst days for the U.S. stock market since the 1987 crash. Following the House of Representatives' rejection of the White House's proposed $700 billion restructuring plan, fears grew that more banks--especially small and midsize lenders--could meet with serious financial trouble unless a new plan was put forth, and quick. Even shares in the three banks that have emerged from the ashes as the industry's largest--Bank of America, JPMorgan Chase and Citigroup--declined more than 10 percent in Sept. 29 trading, while Wachovia was down more than 70 percent after being sold to Citigroup the same day. Bankers believe the industry is headed into a new era dominated by two types of banks: small community banks and credit unions that offer personalized service and local ties, and giants like Bank of America and JPMorgan Chase that compete by offering bigger product lines and potential cost savings from their size.