* Herbert Baer Senior Economist Federal Reserve Bank of Chicago

One of the major reasons that interest margins have opened so wide is the pressure put on the banking system to rebuild capital and reabsorb assets being sold off by undercapitalized institutions, the RTC and FDIC.

Those pressures will continue for another year, because the RTC still has a substantial number of institutions yet to be resolved.

And while the domestic commercial banks are getting better, the foreign commercial banks are coming under stress and will start trying to dump U.S. assets.

That means that banks have another year to make dramatic progress in rebuilding regulatory capital. But it is probably less beneficial for borrowers, who will continue to find banks expecting, and commanding, wide margins.

Even if rates don't move much more, you can do things with fee structures.

I don't think banks are up against a wall yet.

* John Canepa Chairman, president, and chief executive officer Old Kent Financial Corp., Grand Rapids, Mich.

Net interest margins are close to peaking out.

I'm not sure banks can push deposit rates much lower without seeing a further erosion in their core deposit base.

Unless banks can offset that with additional earning-asset volume or fee income, we'll see some erosion of net interest incomes.

* Larry Willard Chairman and chief executive officer United New Mexico Bank, Albuquerque

Our margins are getting a little skinnier every year. Without dramatically changing the banking business as we know it, at some point it's got to stop.

We are trying to hold some margin, but we are having to lower what we pay for money. And the people that are hurting most are older folks. Nobody talks about that much, but the fact remains they are living off of their interest - and it's a lot less than it was years ago.

I think once the election is over we'll gradually see rates move up next year. That should take some pressure off of our spread.

* Lynn Reaser Chief economist First Interstate Bancorp, Los Angeles

Margins will narrow for three reasons:

Over time, we will see the spread between short- and long-term interest rates narrow - mainly from the short end.

And bank's lending rates will be under greater competitive pressure. In the last year or so, there was not much incentive to reduce rates because banks were trying to shrink their balance sheets to meet capital ratios.

The third element is regulation on the state or federal level. There could be some regulatory pressure, or pressure from consumer groups criticizing profit margins or levels of interest rates.

Banks have to maintain continued cost controls and will be under more pressure to find lending or investment opportunities. They will have to generate higher volumes of revenue.

* Robert L. Epling Chairman, president, and chief executive officer Community Bank of Homestead, Fla.

I absolutely think the era of wide net interest margins is drawing to a close.

But our situation is unique [because of hurricane damage].

Our interest margins may stay decent for a while. There is a lot of discussion over what will happen to loan demand.

If we have good loan demand, then I think our margins will be good, because we've got a lot of short-term money in. But in the long term, I think that net interest margins are declining.

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