Addressing the twin challenges of persistent consolidation in the banking industry and regulations that are disproportionately burdensome on the smallest financial institutions is essential to ensuring a future for the nation’s community banking system, Independent Community Bankers of America (ICBA) President and CEO Camden R. Fine said. Speaking in Boston, Fine said that policymakers must ensure their regulations nurture the unique strengths of the community bank model instead of squeezing these institutions into a one-size-fits-all regime.
“Community banks have evolved and remade themselves countless times in their more than 200 years of history, and they will continue to do so in this rapidly changing environment,” Fine said at the Building on 150 Years: The Future of National Banking Conference sponsored by the Office of the Comptroller of the Currency and the Boston University Center for Finance, Law & Policy. “But we cannot let excessive and ill-fitting regulation take away their ability to adapt, and survive.”
Fine noted that the continued concentration of banking assets in the hands of the largest banks risks the loss of availability of banking services in small and rural communities. He cited a recent George Mason University Mercatus Center report that found that while the number of banks with less than $10 billion in assets declined from roughly 8,200 in 2000 to just over 6,200 today, the market share of the five largest banks grew by nearly 50 percent over the same period. Meanwhile, Fine noted FDIC research that found that local citizens in 1,200 of the nation’s roughly 3,200 counties would have limited or no physical access to mainstream banking services without the presence of community banks.
“How our nation's community banks fare in the future will have a significant impact on not just our banking system, but also on our culture, our economy, consumers and the vitality of thousands of smaller communities and rural areas across the country,” Fine said.
