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Where have all the banks gone?

By David McMillin · Bankrate.com
Friday, December 6, 2013
Posted: 11 am ET

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?

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9 Comments
Lloyd
December 08, 2013 at 2:40 pm

I wish people would wise up to Credit Unions. I belong to two. They are the only think between us (consumers) and higher interest, more fees, and poorer service from the banking industry.

Chuck
December 07, 2013 at 11:00 pm

The banks must have moved to 21042. Everytime you turn around another bank pops up. There must over 20 in a two mile radius, none paying much interest for your money.

Louis Clain
December 07, 2013 at 8:59 pm

Why are the big banks still in business. The gov saved them and then let small banks fail. The cost of compliance of regulations is unbelievable. You can not deal face to face with the big banks. Any customer service is provided by clerks who quote policy and very rarely can help. They will not let the customer talk to a manager, nor would it do any good. The customer service and management read from comput screens to answer you concerns. Too big to fail is a terrible experment for the country. We need to make them smaller so that customers can again talk to the decision makers, not new york and calif. Also bank salaries are a joke for most ind working in the banks.

L Palm
December 07, 2013 at 7:19 pm

The answer to your question based on empirical evidence supported by those of us who work in a community bank is that; whether we have enough banks to serve the public need, or not enough is not the point. The point is that if you work at a community bank, the incredible depth of, and the amount of oversight community banks endure from the fed is nearly unsustainable. The oversight stifles productivity, creates less customer focus and service. The liquidity requirements for community banks that really serve our communities are driving profitability to extraordinary lows. The efficiency of our community banks is dropping due to the high cost of compliance which is truly unnecessary at the community bank level, and is in most bank employees opinion unwarranted and highly unnecessary.

Bailjumper
December 07, 2013 at 4:25 pm

Just the fact alone that many of America's population can not afford to use a bank should signal that there is a problem. Too many big banks gobbling smaller banks says that the big banks have too much money now. When there is a fair distribution of cash; ie, wages and employment, and some refusal to use banks that charge to use them, only then will some normalcy return to the economy.

Diane
December 07, 2013 at 3:53 pm

"Too big to fail" is failing. Allowing big banks to merge and smoother smaller banks and not loaning is showing in a still sluggish economy. Spread the credit in a good way. Not just a few already too big companies. When is enough enough!

Alan
December 07, 2013 at 2:17 pm

There are as many banks as are needed, otherwise there would be more. Trying to artificially stimulate growth had disasterous results in the past decade.

Ben
December 07, 2013 at 2:11 pm

Provide incentives to stimulate more credit unions, owned by their own members, not Wall Street or speculators. Institutionalize more oversight of large banks, who for the most part are back to pre-2009 usury and speculative practices.

Joe
December 07, 2013 at 1:25 pm

For the sake of our country and its taxpayers top 10 Banks should be bankrupt, allowing the lower fishes to eat remainders & ending all the fraud, corruption, rip offs these institutions are known for.