Banks, particularly in New England, have experienced major losses of capital as a result of their exposure to risky real estate loans. These losses, accompanied by strict enforcement of capital regulations, have caused banks to shrink their assets in an attempt to improve their capital/asset...

Remarks by Eric S. Rosengren, President and Chief Executive Officer, Federal Reserve Bank of Boston, at The Community Development Advisory Council’s 2012 Regional Convening, Lawrence, Massachusetts, September 24, 2012.

The recent relaxation of restrictions on interstate banking and branching, as well as the likely relaxation of Glass-Steagall restrictions, should encourage significant consolidation in the banking industry. Larger lenders, diversified across regions and products, will undoubtedly be less...