late 80's? The S&L industry went belly up during a rising rate environment. They were less profitable...how could that be?
Banks work off a spread dumb ass but their cost of funds doesn't move as quickly as an interest rate hike. Why you ask? Well because dumb asses like you are exceedingly slow to demand more for their time deposits as rates go higher. Basically, the bank is fucking you up the ass by borrowing your money at a lower than market rate because you're a clown. And it doesn't matter if it's a local, regional, national or international bank. People get arbitraged because they are slow to react. Eventually morons like you begin to realize what's happening and time deposit rates increase.
Based on your supposedly obvious "banking 101" explanation, banks will always make a wider spread because their cost of funds never increases as rates go up. That's just fucking stupid.