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Fallout: The Financial Crisis

Some banks may be too small to survive

Bob Moon Mar 18, 2009
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Fallout: The Financial Crisis

Some banks may be too small to survive

Bob Moon Mar 18, 2009
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TEXT OF STORY

Steve Chiotakis: In Phoenix today, community bankers are kicking off their annual convention. Sponsors are promising new ideas to help small banks deal not only with tough economic times, but costly new regulations. Here’s Marketplace senior business correspondent Bob Moon.


Bob Moon: For the most part, the nation’s smaller banks steered clear of the complicated and risky kind of loan-making that proved to be the downfall of their giant rivals. But they’re still feeling the sting:

Michael McGuire: I didn’t do it, it’s not my problem, and yet I’m paying for it.

Affinity Bank CEO Michael McGuire says that’s how many of his fellow community bankers feel these days. He runs a small banking chain in Ventura, Calif., north of L.A. And he’s concerned over the higher levels of cash the government is pressuring all banks to raise now. He says that’s hurting their ability to lend, at the same time community banks could play a key role in restoring confidence at the local level.

McGuire: If the consumer sees healthy businesses on Main Street, I think the consumer is more likely to get out and spend and be a part of the recovering economy.

Times are even tougher for smaller community banks with maybe one or two branches. Bart Narter with the research firm Celent says they can’t afford the growing expense of tighter government regulations and providing costly high-tech services such as online banking.

Bart Narter: The increased complexity is raising the bar as to the minimum viable size of a bank.

Seems these days, some banks are too big to fail, and some too small to survive.

I’m Bob Moon for Marketplace.

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