WASHINGTON–A trade group representing America’s community banks is denouncing a statement made by the CEO of one of the biggest financial institutions in the U.S. that there are too many banks in the country.
In response to a statement by Kelly King, who heads the $220-billion BB&T that the U.S. has an overabundance of banks, Camden R. Fine, CEO of the Independent Community Bankers of America said, “ICBA strongly disagrees that there too many banks in the United States. On the contrary, decades-long consolidation of the U.S. banking system into fewer and fewer hands has contributed to a decline in access to financial services for many communities, a reduction in consumer choice, and the exponential growth of too-big-to-fail financial institutions. This consolidation, fueled by rising regulatory burdens on community banks, culminated in the 2008 Wall Street financial crisis and the worst economic downturn since the Great Depression—a calamity from which we are still recovering. Not all banks are the same, and the community bank voice needs to be differentiated, elevated and heard.”
In contrast, Fine said that locally based community banks are highly capitalized, reinvest in their communities, provide local leadership, and operate a business model built on relationships and accountability to the customers they serve.
“While these local institutions are the only physical banking presence in nearly one-in-five U.S. counties, their numbers have dwindled by roughly 1,500 since 2009,” said Fine.
Fine added the “trickle” of de novo banks entering the market further inhibits access to credit and financial services in communities overlooked by larger institutions.
“The nation’s growth and development over the past century and a half is due in no small part to its economic diversity and access to local sources of capital,” Fine said in a statement. “Community banking is synonymous with the American traditions of independence, self-reliance and entrepreneurship. It goes to the heart of what we believe as a nation: that we are stronger from the bottom up than from the top down. That we are more powerful collectively when we are empowered individually.
“The challenge facing the banking industry today is not how to bump off more locally based competition to benefit megabank investors, but how to maintain a diverse and decentralized system to ensure continued access to financial services for all Americans,” he continued. “While megabank CEOs and their representatives in Washington might think there are too many banks, in truth there are not enough.”