According to data from the Federal Deposit Insurance Corp., the number of banks in the U.S. currently sits at 6,891. That figure may sound like a lot, but it's actually the lowest number ever recorded in the FDIC's database, which dates back to 1966. While the banking industry was shrinking before the recession, the past five years have helped fuel the trend with nearly 500 bank failures.
As more community banks have closed their doors, there has not been a rush for other institutions to replace them. In fact, the FDIC has only approved one new bank charter since 2011. That's quite the contrast compared with just a few years ago. In 2007 alone, there were 175 new bank charters.
The lack of new institutions is making some members of the banking industry concerned. The Independent Community Bankers of America and the American Association of Bank Directors are urging the FDIC to relax its restrictions for de novo, or new, banks to launch.
"A policy that effectively prevents the formation of de novo banks at all, or only in severely limited circumstances, raises questions whether that kind of restrictive policy is necessary and whether the public interest is served by making it virtually impossible for de novo community banks to be formed," the two banking organizations wrote in a joint letter.
More banks would give consumers more options, but the recent struggles of some of the smallest members of the banking industry are clearly concerns for the FDIC.
Do you think the FDIC should relax its policies to let more banks open? Or is less than 7,000 institutions enough to serve the public interest?