HOPEFULLY BY THE TIME THIS GOES TO PRESS WE WILL BE TALKING ABOUT THE STRENGTH OF THE RECOVERY, but as I write this, the Federal Government has acknowledged what we all already knew: the U.S. economy has dipped into the first recession since the early 1990s. The probable effects of a recession are numerous. Softer volume growth, greater credit losses, business failure related attrition � these are all problematic outcomes for individual acquirers, but they do not restructure the competitive environment, per se. The interesting question is whether this recession will result in a repeat of 1991/1992 and trigger merger and acquisition activity that reshapes the business.
   1991 is so distant now. In 1991, CFC Financial was still a top five acquirer, and neither PIN- nor Signature-debit were realities. There were still floor limits in the U.S., and the T7P was still about three years away. Banks were still the central competitors in an industry about to be revolutionized by non-bank competition.
   And in 1991 and 1992, 17% of industry volume changed hands in merger and acquisition activity, a level not to be reached again until the FDMS, NOVA and GPS alliance programs of the mid and late 1990s. Names in some respects hard to recall, Shawmut, Central Fidelity, Signet and many others all exited the business as their parent companies suffered the effects of the recession and looked for saleable assets to generate gains and shore-up capital. The increasing complexity of the business also triggered more strategic decisions to exit at some banks and the long road to a consolidated market structure began.
   Much is different now than in the last recession. The banking industry is stronger than in 1991 when the industry had come off a decade of foreign debt/agriculture belt/ commercial real estate turmoil. There will likely be less of a need to generate divestiture oriented gains at banks, in general. Every bank with a portfolio has had ample opportunity to sell it unlike in 1992 when portfolio sales were more of a new thing and the banks that remain independent acquirers have all made affirmative decisions to do so. Independent bank acquirers account for a great deal less of the industry now than they used to � 56% in 1991 versus 25% by the close of the decade.
   This is not to say that bank acquirers will not sell portfolios over the coming months � undoubtedly they will. However, we speculate that if a mergers and acquisitions cycle does result from the economy it will have a different character.
   In the issuing business a type of deal called a "carve out" has emerged as a popular structure in which an issuer will sell non-strategic accounts but keep its core relationship customer. The same type of deal may work for commercial bank acquirers which could divest out-of-market or non-relationship accounts, generate a gain, but retain those customers the acquiring business shares with other banking lines-of-business. This type of transaction would resemble the static pool sales common in the ISO market.
   In 1992, three organizations emerged as the primary beneficiaries of bank divestiture � NaBANCO, NOVA and CES � and these organizations and their successors have continued to play a central role ever since. We will all have to stay tuned to see if this recession offers the same opportunity.