Even though small banks were not responsible for the financial crisis, they are being regulated out of existence by the Dodd Frank regulatory regime. The Obama administration adores big banks.
The explanation for the sharp and continued downward trend in the number of small banks is the impact of fixes that the Democrats installed, ostensibly, to punish big banks and to protect us from their misdeeds. Here is what is happening instead.
In a period when low interest rates are squeezing small banks, the costs of adhering to new regulations are taking a toll. Executives from at least a half-dozen small banks that have agreed to be acquired in recent months said the increasing regulatory burden was a factor in their decisions.
The executives said the new rules aren't scaled for banks of their size. While the financial-overhaul law and other new rules were aimed at reducing the problems caused by big banks, small banks must deal with many of them as well, and the costs don't necessarily get lower as the banks get smaller.
"When they created 'too big to fail,' they also created 'too small to succeed,'" said Dan Baird, chief executive of Capital Funding Group Inc., which last October sold its CFG Community Bank, a Maryland bank with $481 million in assets, to MVB Financial Corp.When we went up to Kalispell for the annual shareholders meeting of Glacier Bancorp in April the CEO said:
The wave of new regulations continues at a mind boggling pace. Banks had to interpret, implement and train on 16,000 pages of new rules just in 2013 alone. Dodd/Frank is simultaneously increasing the regulatory burden for banks while restricting revenues. We are beginning to see numerous community banks look for strategic partnerships in order to avoid the costs and constraints of complying with the new regulatory environment -- good news for us.
But not good news for community banks, which are being gobbled up one after another by their larger, more prosperous competitors.
Carry on. Pay no attention. Concentration of power and control in a fortunate few continues to grow. Good luck to all.