In response to comments made in a recent interview by BB&T Bank CEO Kelly King who said there are too many banks in the United States, the Independent Community Bankers of America (ICBA) fired back with a strong rebuke.
“ICBA strongly disagrees that there too many banks in the United States,” ICBA President and CEO Camden Fine said this week. “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.”
Fine said 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,” Fine added. “Meanwhile, the trickle of new, de novo banks entering the market further inhibits access to credit and financial services in communities overlooked by larger institutions.”
The ICBA chief argued that the nation’s growth and development over the past century are due in no small part to its economic diversity and access to local sources of capital.
“Community banking is synonymous with the American traditions of independence, self-reliance, and entrepreneurship,” Fine said. “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 is not how to eliminate more locally based competition to benefit megabanks but to maintain a diverse and decentralized system to ensure continued access to financial services.
“While megabank CEOs and their representatives in Washington might think there are too many banks, in truth, there are not enough,” Fine concluded.