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Related: About this forumOne in Four Local Banks Has Vanished Since 2008. Why We Should Treat It as a National Crisis
http://www.yesmagazine.org/commonomics/one-in-four-local-banks-has-vanished-since-2008Heres a statistic that ought to alarm anyone interested in rebuilding local economies and redirecting the flow of capital away from Wall Street and toward more productive ends: Over the last seven years, one of every four community banks has disappeared. We have 1,971 fewer of these small, local financial institutions today than at the beginning of 2008. Some 500 failed outright, with the Federal Deposit Insurance Corporation (FDIC) stepping in to pay their depositors. Most of the rest were acquired and absorbed into bigger banks.
To illustrate this disturbing trend and highlight a few of the reasons we should treat it as a national crisis, weve published a trove of new graphs. These provide a startling look at the pace of change and its implications. In 1995, megabanksgiant banks with more than $100 billion in assets (in 2010 dollars)controlled 17 percent of all banking assets.
By 2005, their share had reached 41 percent. Today, it is a staggering 59 percent. Meanwhile, the share of the market held by community banks and credit unionslocal institutions with less than $1 billion in assetsplummeted from 27 percent to 11 percent. You can watch this transformation unfold in our 90-second video, which shows how four massive banksBank of America, JPMorgan Chase, Citigroup, and Wells Fargohave come to dominate the sector, each growing larger than all of the nations community banks put together.
If we continue to go down this path, well kill this concept of relationship banking, contends Rebeca Romera Rainey, the third-generation CEO of Centinel Bank in Taos, New Mexico. Like other community banks, Centinel makes lending decisions based on its relationships with its customers and deep knowledge of the local market. It underwrites a wide range of business loans and home mortgages to local families. Many of these borrowers would likely not qualify for big-bank financing because they do not fit neatly into the standardized formulas megabanks use to evaluate their risk of default
Local banks are not fading away in every state. They are numerous in North Dakota, where they hold over 70 percent of deposits. The states rural geography and robust economy partly explain the difference, but the main reason is the 96-year-old Bank of North Dakota (BND), the only state-owned bank in the nation.
BND bolsters the capacity and competitive position of local banks by partnering with them on loans and providing wholesale banking services. The impact is significant. North Dakota not only has more banks per person than any other state, but the volume of business and farm lending they do is markedly higher (see our analysis), as is the share of mortgages held in state (which ensures that mortgage interest paid by residents benefits the states economy, not Wall Street).
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One in Four Local Banks Has Vanished Since 2008. Why We Should Treat It as a National Crisis (Original Post)
eridani
May 2015
OP
TY, North Dakota for showing the way. Tx to Elizabeth Warren for yet again leading the way.
mother earth
May 2015
#2
Sherman A1
(38,958 posts)1. K&R!
This is indeed a very important and very concerning issue.
mother earth
(6,002 posts)2. TY, North Dakota for showing the way. Tx to Elizabeth Warren for yet again leading the way.
K & R
Ellen Brown is must reading on this subject.