Institute for Local Self-Reliance

Stories by Institute for Local Self-Reliance

New Graphs Show the Failures in U.S. Banking Policy

Prior to 2010, about half of the local community banks lost to mergers each year were replaced by a new startup banks. That pipeline disappeared in 2010, in part because regulators imposed much higher hurdles for new banks after the financial crisis. These new regulations have accelerated the decline of community banks, and that trend matters because these small institutions punch way above their weight in areas like small business lending. As the graphs provided show, community banks and credit unions control only 16 percent of the industry’s assets, but they supply more than half of lending to small businesses.