WSJ: The Demise of the Small American Bank

[nonniey]

http://www.wsj.com/articles/the-demise-of-the-small-american-bank-1438382060

 

........"The result is that Dodd-Frank, a law intended to take on the systemic risk of “too-big-to-fail” banks, is multiplying the problem. “The big banks that are too big to fail are bigger now than ever, but the regulations have trickled down to the smaller banks that didn’t cause the financial crisis” Mr. Hill says. As a result, community banks are disappearing. “When I started my first bank in the 1970s there were 24,000 banks in America,” he says. “There are now 7,000 banks. It may soon be 500 or even fewer.”.......

 

 

 

So which is the party of big business again?

[Kosher Ham]

It's all about who can easily find an ATM these days.

 

There are many reasons small banks fail. Too Big to fail, was completely absurd, same with the car company bailouts.  

[Destino]

So which is the party of big business again?

 

All of them.  Obviously.

[chipwhich]

All of them.  Obviously.

 

Funny when we vote millionaires into office and have lobbyists stuffing their pockets and people are naive to think one party is the problem.  Sad actually.

[Kosher Ham]

At my age I wonder about if someone else had become the President.

 

Ross Perot for example.

Al Sharpton.

 

Shoot, even when I was a kid, I thought about some of these things.

[Destino]

I like to wonder what would happen if we stopped electing lawyers and business owners and started electing middle class people that have spent most of their lives holding down jobs in diverse fields.  People that understand the grind of real american life.  Also, of course, banned all donations other than volunteering time from politics and allowed lobbyists to only meet with staffers, never the elected rep, and only in government offices where they could provide no benefits other than their opinions and requests.    

 

There is a great chance of bringing dinosaurs back to life and electing one of them President.  It's a pretty thought to hold in my head though. 

[Springfield]

If it's Hillary vs Trump I won't vote. For the first time in my adult life, I won't vote for president.

[twa]

Credit Unions have largely taken over the small bank model that used to exist long ago, banking regs and mergers long ago put them on the glide to insolvency.

[Jumbo]

partisanship rocks

[Jumbo]

If it's Hillary vs Trump I won't vote. For the first time in my adult life, I won't vote for president.

 

 

I've told the tale before, but there I was...a proud 18 year old able to vote for the first time and that year there's a presidential election! 

 

Tricky Dick v George "what do I think, again?" McGovern.     

 

I went for Nixon even with my long-haired pot-smoking drum-playing hippy-girl-loving Led Zeppelin-listening lifestyle.

 

The choices for POTUS never really got that much better for me. 

 

I'd sit out a Hillary v Trump (Trump not gonna happen of course), except I might find it worth it to vote Hillary just because of the epic freak-out (and for more than one reason why) a lot of folks would have over it. A guy's entitled to some fun at this point, even at the nation's expense.  

[PleaseBlitz]

I help banks navigate government regulations for a living.  It's a REALLY good business to be in these days.  Here are the 2 key paragraphs of this article:

 

 

The problem in the U.S. starts with towering federal regulations, such as the voluminous reporting and compliance rules in Dodd-Frank, the financial reform act that recently celebrated its fifth birthday. “Regulators are making it impossible for the medium and small banks to comply with the rules,” he says. “The burdens get so intense that it is destroying the small and medium-size banks in America.”

The result is that Dodd-Frank, a law intended to take on the systemic risk of “too-big-to-fail” banks, is multiplying the problem. “The big banks that are too big to fail are bigger now than ever, but the regulations have trickled down to the smaller banks that didn’t cause the financial crisis” Mr. Hill says. As a result, community banks are disappearing. “When I started my first bank in the 1970s there were 24,000 banks in America,” he says. “There are now 7,000 banks. It may soon be 500 or even fewer.”

 

 

This is completely true.  Since Dodd-Frank, the CFPB and other regulators have written and implemented a tremendous amount of new regulations, most of which are extraordinarily complex.  The smaller banks cannot afford to pay people to learn, understand and implement these rules.  It costs a fortune.

 

Just for instance, the major one about to be implemented is called TRID, the TILA-RESPA Integrated Disclosure Rule.  It basically replaces 2 forms for mortgages, the GFE and the HUD-1 Settlement Statement with 2 different forms, the Loan Estimate and the Closing DIsclosure.  YOURE WELCOME AMERICA, says the CFPB.

 

The published rule and the commentary explaining it is 1,888 pages, and STILL leaves a whole bunch of questions unanswered.  This is just one of MANY new rules implemented by Dodd Frank.  If you think i'm exaggerating the length, you can find the rule on the CFPB webpage here:  http://files.consumerfinance.gov/f/201311_cfpb_final-rule_integrated-mortgage-disclosures.pdf.

[PokerPacker]

It's all about who can easily find an ATM these days.

 

There are many reasons small banks fail. Too Big to fail, was completely absurd, same with the car company bailouts.

Too big to fail = too big to exist.

[PleaseBlitz]

Too big to fail = too big to exist.

 

 

You could make a killing in the bumper sticker biz.  

[PokerPacker]

You could make a killing in the bumper sticker biz.

Soon enough I'll have enough money to be in the one percent!

[PleaseBlitz]

Because this is a topic that I very much enjoy, I am going to bump this thread once.  Here are 3 potential avenues this thread could go down:

 

1)  a discussion about how government policies often/rarely (depending on your political bend) end up doing the exact opposite of what they were sold to the public as.

 

2)  why small banks are good and why their demise is bad for people.

 

3)  Hilary . . . ???

[twa]

watching the changes in banking over the last 40 yrs or so, as ATMs,electronic checking and the explosion of credit/debit card began use has been interesting.

My cousin runs a few small ones , can't understand half the things he complains about

 

certainly not your fathers bank anymore, I prefer the credit union

[Hersh]

Because this is a topic that I very much enjoy, I am going to bump this thread once.  Here are 3 potential avenues this thread could go down:

 

1)  a discussion about how government policies often/rarely (depending on your political bend) end up doing the exact opposite of what they were sold to the public as.

 

2)  why small banks are good and why their demise is bad for people.

 

3)  Hilary . . . ???

 

Why are small banks good?

[chipwhich]

Why are small banks good?

 

This.

 

My large bank is good because I get everything free.  Checking, ATM withdrawals at any ATM, free checks, everything.

 

I never really understood being emotional about a bank.  I do everything electronic and never really set foot in one.  I have an account at a small bank and one at a large and one at a credit union.  The large bank has hands down the best online banking.

I guess it's what matters to you most.  I like free and convenience.

[Fergasun]

Dodd-Frank was step 2 of the 2008 bailouts. If the banks didnt want Dodd-Frank, don't take the bailout money.

Personally, I would prefer the "One Dollar of Capital" regulation... on my phone so will link in this thread later. Yes - that regulation would screw banks in near term but it would prevent bailouts and TBTF, problem.

[twa]

 

This.

 

My large bank is good because I get everything free.  Checking, ATM withdrawals at any ATM, free checks, everything.

 

I never really understood being emotional about a bank.  I do everything electronic and never really set foot in one.  I have an account at a small bank and one at a large and one at a credit union.  The large bank has hands down the best online banking.

I guess it's what matters to you most.  I like free and convenience.

 

 

 

The less wealthy probably have a different experience.

I like the CU and small bank since I can treat them as a personal assistant,less so with the big one.....and everything free

 

something I need or want addressed one short call to someone I know will do.

[chipwhich]

The less wealthy probably have a different experience.

I like the CU and small bank since I can treat them as a personal assistant,less so with the big one.....and everything free

 

something I need or want addressed one short call to someone I know will do.

 

Doesn't matter.

 

I went into my credit union with my daughter.

I wanted to get a loan on a $12,000 car.

Credit score is great.

 

Previous car loan and paid for.

 

They were pissed at me because I didn't use them for direct deposit.

 

Made me jump through all kinda hoops for a $12K car loan.

 

It was silly.

 

Told me if I direct deposited into their account the loan would be easier.

 

Nonsense.

 

They knew me and still screwed me.

 

 

BTW twa, they wouldn't accept my paystubs or my credit report, made me submit 6 months of bank statements and my first child to get a $12,000 loan.   I told them I would never use them again.

 

I used them because the guy selling me the care was in the building with the credit union.

[Major Harris]

I use a small community bank. Everything is free. Only downside is, if I'm out of the area, i might catch an atm charge. That's rare, because i don't travel much and i don't use cash much.

The bigger banks are the ones with all the fees here, at least it used to be that way.

I don't get why people really care a whole lot.

[Kilmer17]

Small banks are more helpful to small local businesses.

It's much easier to convince a loan officer and bank exec at xyz community bank that your local business is worth loanig money to, than it is to convince a loan officer with bank or America who plugs info into a system that says yes or no and give him or her Zero wiggle room.

Banking is far more than checks and ATMs

[nonniey]

The primary problem is the too big to fail. We know that they can indeed fail and when they do it results in economic mayhem and expensive bail-outs.  Dodd-Frank was supposed to alleviate this problem but not only failed, it  exacerbated the problem.  The correct move would be to repeal Dodd-Frank but that isn't going to happen because it would hurt the "Legacy."

[PeterMP]

The primary problem is the too big to fail. We know that they can indeed fail and when they do it results in economic mayhem and expensive bail-outs.  Dodd-Frank was supposed to alleviate this problem but not only failed, it  exacerbated the problem.  The correct move would be to repeal Dodd-Frank but that isn't going to happen because it would hurt the "Legacy."

 

Problem happens.

Law passed to fix problem (supposedly).

Problem continues to grow worse (supposedly)

Solution- repeal law designed to fix problem.

 

 

Repeat.

 

First, the concept as suggested is stupid.  Even if the problem was Frank-Dodd, all you'd do was go back to where we were before where there were banks that were too big to fail.

 

It isn't like that before Frank-Dodd banks didn't fail, weren't getting bigger, and them failing didn't cause huge issues.

 

Second, the idea is wrong.  Frank-Dodd wasn't made to prevent banks from getting big.  It was designed to make it less likely that banks would fail at least in the same manner that they did.

 

Nobody said when Frank-Dodd was passed that this will make banks smaller or was an advantage to smaller banks.

 

The objective of Frank-Dodd is to prevent the things that are really big from failing.  Not letting them get big.

 

Because before Frank-Dodd there were really big things and had been getting bigger.  Frank-Dodd takes on the assumption that there will be really big things.

 

I think too big of things are a problem (for other reasons), but if you look at things there are 2 possibilities;

 

1.  Prevent/minimize the chances of things getting too big.

2.  Take extra precautions to make sure things that are really big don't fail.

 

Frank-Dodd takes the 2nd approach.