the concept had stagnated, and the benefits of specialization and the provision of niche service were recognized instead. i believe that this past experience with business conglomerates could be tempering some enthusiasm for affiliations among the larger financial firms. the difficulty of finding synergies, planning management structures, engaging in post - merger integration, and other management issues may be influencing the willingness of larger firms to affiliate. these same experiences should temper our views of the future structure of the financial services industry. managing much larger, more - diversified firms clearly offers both challenges and benefits. although this business strategy may be optimal for some, it is surely not the best approach for all financial services firms. so what will the financial services industry look like in the future? obviously, no one can say for sure, but i expect that consolidation will continue to occur both within and across segments of the financial industry. the number of commercial banks is likely to continue to decline, but i expect that we will always have a large number of banks in the united states and that they will vary considerably in their size and geographic scope. as one telling piece of evidence, i note that over the 1980s and the 1990s more than 4, 000 new commercial bank charters were granted in the united states. essentially all of these new banks were quite small, but were able to achieve profitability in a relatively short period of time. this having been said, we may well see the formation of a few very large financial conglomerates, but we will almost certainly continue to see many firms, both in banking and other financial businesses, that specialize in providing a narrower range of financial products and services. we will probably see an increase in the number of combinations between u. s. - based and foreignbased entities, but many strictly domestic financial service providers will remain. in short, i believe that diversity in size, product offerings, and geographic scope will continue to characterize the american financial services industry for many years to come. some implications for supervision and regulation what do these trends and projections mean for bank supervision and regulation? a full answer to that question is too tall an order for today, but i would like to highlight what i consider some of the most important implications for maintaining a safe, sound, and competitive banking system. perhaps the best place to begin is with an understanding of the regulatory framework of gramm - leach - bliley. this landmark legislation facilitated the development of truly diversified financial institutions, allowing the market system to decide what arrangements are

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