Monday, May 11, 2015

There May Be Only 4 Banks in the Entire Country Someday

"If we continue to go down this path, we'll kill this concept of relationship banking." (Photo: Rainforest Action Network / John Duffy)

Good Day World!

Imagine this; there’s only four banks in America.

Community banks no longer exist. There’s no credit unions to join. Just four incredibly powerful banks. 

Does that sound crazy? Maybe not.

(Photo: Rainforest Action Network / John Duffy)

Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo - have come to dominate the entire banking sector, each growing larger than all of the nation's community banks put together.

Here’s a 90-second video that describes the alarming growth of these four mega-banks; giant banks with more than $100 billion in assets (in 2010 dollars).

How has this happened so quickly? What has caused this disturbing trend?

Some scholars and bankers are giving the blame to the added costs of complying with the Dodd-Frank banking reform law, which created the Consumer Financial Protection Bureau and imposed new rules on banks' behavior. 

A more comprehensive and nuanced answer to the question of why community banks are vanishing in such numbers has been put forward by Arthur E. Wilmarth, a law professor at George Washington University.

In a lengthy paper, Wilmarth provides a damning look at the regulatory disadvantages faced by community banks, but without feeding the deregulation agenda of their big competitors.

For a complete understanding of the whole situation read this article, produced by the Institute for Local Self-Reliance, as part of its Community-Scaled Economy Initiative.

Time for me to walk on down the road…

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