Those of us at the Fed pay a great deal of attention to this type of bank formation, because it is the primary source of new competition in the markets in which community banks compete.
Making assumptions about exogenous variables is an important component of the forecasting process. But it is not always easy. Take for example the international oil price for example. It is one of the most important exogenous assumptions in our model and we have to formulate a view of the price over the coming three years.