Implications of a Prolonged Low-Rate, Low-Growth Economy

June 17, 2010 at 1:26 PM
 I was invited to speak about the future of community banking at an investor conference this past weekend. Several economists also participated, as well as regulators and investment bankers. Of particular interest was the shared opinion of the economists: this low interest rate environment will endure through 2010 and beyond. If you work with or in a banking company that is positioned to benefit as rates rise, you may have to wait a while. In the meantime, credit demand even with low rates remains extremely weak; mortgage foreclosure and delinquency rates have yet to peak; and, while business and consumer spending show some signs of life, they remain weak by historical standards. What's a banker to do?  
We expect to see increased merger activity among weak and healthy banking companies; a greater sense of urgency on cost reduction and outsourcing; and resources shifting toward growth opportunities including retirement; savings; affluent consumers; business industry-sector specialization; and certain mobile and payments-related capabilities.
For more information about the state of the economy nationally or in your region or to discuss your business plan and how it can be strengthened, email me at

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