00:00Herman, not only are they weighing it, today was supposed to be this deadline.
00:04It is. It is this deadline, right?
00:05Okay, well, yeah, but, like, is it a legal deadline?
00:09That's a little bit more squishy, but it's the Trump-imposed deadline.
00:13Have we had any movement at all from banks for them to offer a credit card that caps rates at 10%?
00:18It is a Trump-imposed deadline.
00:20We're not sure if that's really a legal deadline, but at this point, it's just status quo for the banks.
00:26They're operating, like, in normal conditions where credit cards are their credit cards.
00:31They're not offering a 10% blanket rate, and they're just operating as is.
00:36They are being sued, though, some of them, J.P. Morgan.
00:39So what do we know about this lawsuit?
00:41Right. I characterize that as heavy as the head that wears the crown, right?
00:46J.P. Morgan's the biggest bank in the United States, most profitable, really strong returns, really strong valuation.
00:52And a lot of that really reflects reputation risk during the prior Biden administration, where it was really embedded into the supervisory actions of bank regulators.
01:02So banks had to be a bit more cautious with what happened after the Capitol riots.
01:09So I think that's just reflective of how banks had to operate back then.
01:13And really, now we're seeing the repercussions of that under Trump.
01:17I mean, it's also interesting for a sector that is supposed to be benefiting from this White House and from deregulation.
01:23On that note, you had some of the regional bank earnings today, and it struck me that two of the three that reported are undergoing their own M&A.
01:30Right.
01:31Fifth, third with Comerica.
01:33And then you also have U.S. Bank Corp with BTIG.
01:36I mean, is this just easily the theme?
01:37Does that kind of overshadow their individual reports, the fact that the regional banks are becoming more like super regional banks?
01:43Yes. So that's happening. And that's actually one of the positives under the Trump administration, where there's much less red tape for M&A.
01:50And that's really struck a chord for the large regionals, where they're doing more bank M&A deals.
01:56We'd expect that to continue, especially with some of these better valued banks.
02:01We're potentially seeing some more activity by the likes of PNC and M&T.
02:07And some of these deals that have been announced, they'll be digested and really strengthen the earnings power of U.S. banking.
02:12How much does that M&A continue, Herman?
02:14Because I remember when we were talking to you every day about SVB, a lot of people were shocked to hear that there were like 5,000 banks in the U.S.
02:23It's an incredibly fragmented market once you get past the top six or the top 60.
02:29Do you expect that number to shrink?
02:31Yeah.
02:31Are we going to see 4,000?
02:32Are we going to see 3,000?
02:34We're a little over 4,000 now.
02:35We'll see that shrink over time.
02:36And that's just ongoing to continue because there's not a lot of new banks that are opening up.
02:43There's not a lot of de novo action.
02:46But there is going to be more consolidation because the banking industry is super fragmented.
02:51And there's a need for economies of scale given the fact that banks are investing in compliance, technology, et cetera.
02:58And less regulation, right?
03:00So I'm just wondering, does this administration supercharge that natural process?
03:06Yeah, it's happening now.
03:07So bank deals are getting approved by less than 100 days now.
03:11And that was something that was unheard of under the Biden administration where it took upwards of a year or above to do deals.
03:18So you're seeing more M&A activity and that will continue throughout this term.
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