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international context.  Table 2 compares the structure of

the banking systems in the G-7 countries.  The United States

has far more banks per person (i.e., lower population per

bank) than any of the other major industrialized nations.

If the number of banks in the United States were reduced to

about 2,800, then the number of banks per person would be-

come similar to the figures for France, Italy, and the Unit-

ed Kingdom but still be much greater than for Germany, Cana-

da, and Japan.  The United States also has a relatively high

number of bank offices per person (i.e., lower population

per banking office); of the G-7 nations, only Italy and Can-

ada have more bank offices per person.

The final columns of Table 2 demonstrate the very low

level of banking concentration in the United States relative

to the other G-7 countries.  The three biggest U.S. banks

control roughly 13 percent of all banking assets in the

United States, by far the lowest concentration in the G-7.

The next least concentrated countries are Japan and the

United Kingdom, where the top three banks have market shares

more than double that for the top three banks in the United

States.  In addition, banking system assets as a fraction of

total gross domestic product are relatively low in the Unit-

ed States compared with the other industrialized countries.

In the United States banking system assets are roughly 59

percent of GDP, which is roughly half the average of the

other six G-7 countries.  When seen in a global context,

even the largest combinations being created through the so-

called megamergers in the United States are not generating

institutions that are unusually large relative to either the

banking system or the economy as a whole.

Conclusion

We are in the midst of the transformation of the U.S.

banking system from one that is effectively unfriendly to

the consumer to one that is much less so.  Addressing finan-

cial services regulatory reform is very important to permit

an efficient and sound modernization of the U.S. banking and

financial system.  Expanding banking powers and giving banks

flexibility to choose the most appropriate firewall separa-

tions, as long as the banks and their subsidiaries have high

levels of capital, will be an important part of any reform

effort.  Market forces can be very effective in minimizing

the opportunities for conflicts of interest and avoiding any

harm to consumers.  Customers can benefit from having the

option of using financial services supermarkets if they so

choose.