LABJ Forum/14″/dt1st/mark2nd

Last week, Citicorp and Travelers Group Inc. announced an agreement to merge in a record-breaking, $83 billion deal that, if approved, would be the largest merger in U.S. history. The merger is a direct challenge to Congress to overhaul the nation’s banking laws, which today prohibit banks from acquiring securities firms and insurance underwriters like the one owned by Travelers. Recent efforts to reform such laws have run into opposition on Capitol Hill. The Business Journal asks:

Should the financial-services industry be deregulated to allow mergers like the one between Travelers Group and Citicorp?

Alfred Osborne

Board Member

E*Capital Corp.

Absolutely. Mergers and consolidation make economic sense. They can lead to lower costs and better and more choices for all customers on a global basis. This is a horizontal merger and has great value. Travelers and Citicorp represent a series of customers, and it is a great way to serve their customers. It makes an awful lot of sense for them to merge. Once deregulation goes away, competition is better served.

Bob Pearlman

Partner

Grant Thornton LLP.

In general, I believe in less regulation and less overall regulation interference. Clearly the mergers that we are seeing now in the financial-services industry are making the financial-service institutions more efficient and more profitable. This may come, however, at the expense of the consumer, who may be subjected to higher fees and lower service. Capitalism is our system and less regulation lets the economic system work on its own.

John Salas

General Manager and VP

Exhibit Enterprises Los Angeles

I am against it. I have seen the results of large companies that merge with large companies and more often than not, it is the customer who pays the price. The customer loses in terms of quality of service and quality of product. It is a direct challenge to Congress. These mergers take away some of the American dream, and it stops smaller companies from getting in on the market. It cuts out opportunity. It is a deeply rooted subject that needs examination by Congress.

Bill Boyd

Senior Vice President of Office Services

Grubb & Ellis

It would be important for the government not to interfere or impede the private sector from pursuing strategies that are beneficial not only to the merging companies, but also to the consumers they serve. The government’s role should only be to protect the marketplace and not interfere in the market.

James Jackson

Vice President

Transamerica Occidental Life Insurance

I think the world is going in this direction, and it is inevitable and probably desirable. The Europeans have long had conglomerates in banking and insurance underwriting. And prior to this, they stood at the top of the heap. It will give great impetus to some federal law that will eventually permit this. It will probably happen next year.