Prompt corrective action rules have caused banks to increase capital and operate more safely, according to Kevin T. Jacques of the Office of the Comptroller of the Currency and Raj Aggarwal of John Carroll University.

The researchers find equity capital held by U.S. banks rose 28% in the two years after Congress adopted the Federal Deposit Insurance Corp. Improvement Act of 1991, which authorized regulators to seize banks when capital falls below 2%.

"Failures declined precipitously in the years following the passage of FDICIA, while a casual observation of bank capital ratios and levels suggests that PCA has been successful in getting banks to increase capital." For a copy of "Assessing the Impact of Prompt Corrective Action on Bank Capital and Risk," call 202-874-5770.

Antitrust laws may do more harm than good, writes William F. Shughart 2d, a professor at the University of Mississippi. In an open market, investors acquire inefficient companies. These investors believe they may earn a profit by hiring new managers, closing outdated production facilities, canceling unwise investments, and changing distribution channels.

Antitrust law, however, disrupts this process. Government reporting requirements are expensive and alert other investors that the target company may be worth more than its market value. It also gives competing companies, trade groups, and other special interests an opportunity to derail the deal, he writes.

"When the antitrust authorities intervene to reshape markets at the behest of competitors, private decisions about how best to organize production are displaced by government decisions," he writes. "Innovative firms are penalized, scale economies lost, and competition is thwarted, not enhanced."

For a copy of "The Government's War on Mergers," call 202-842-0200 or visit www.cato.org/pubs/pas/pa-323es.html.

Whites benefit most from the rapid rise in mortgage lending, according to a study by the Association of Community Organizations for Reform Now.

The group's study reviews Home Mortgage Disclosure Act data from 35 big cities. It finds conventional mortgage originations increased 24% for whites from 1995 to 1997, but only 5% for blacks. Hispanics actually experienced a 1% decline in conventional lending during the two-year period, it writes.

It also finds that blacks in 1997 were 2.1 times more likely to be rejected for mortgages than whites. That is up slightly from 1995. Hispanics were rejected 1.76 times more often than whites last year, up from 1.62 times more often in 1995.

"The findings show that minorities have been denied the opportunity to take fair advantage of the favorable economic conditions for home buying," the group said.

For a copy of "Giving No Credit Where Credit is Due," call 202-547-2500.

The Federal Reserve Bank of New York has released a compendium of papers and speeches presented at its February conference on the future of bank capital requirements.

The consensus from the conference was that regulatory capital requirements must keep pace with advances in bank risk management strategies. Also, one-size-fits-all capital requirements no longer make sense. The compendium includes papers on allocating capital for credit risk, risk management techniques, deposit insurance, and future regulatory strategies.

For a copy of "Financial Services at the Crossroads: Capital Regulation in the 21st Century," call 212-720-6143 or visit www.ny.frb.org. American Banker,

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