The Age of the Bankster

Remember Mr. Potter, the banker in “It’s a Wonderful Life”? He wasn’t exactly a paragon. In fact, it wouldn’t surprise me to learn that his character reflected how people of that era viewed their local banks and bankers.

Potter-like or not, however, bankers used to live in their communities and tended to have a pretty accurate picture of their needs, not to mention the credit-worthiness of the merchants and working folks who made up those communities.  (I grew up in a small Indiana town, and remember our local bank president with some affection; if I was overdrawn, he’d just call my father, who would transfer some money into my account. No embarrassing surprises, no fees. Just a parental lecture.)

So this report is troubling.

Here’s a statistic that ought to alarm anyone interested in rebuilding local economies and redirecting the flow of capital away from Wall Street and toward more productive ends: Over the last seven years, one of every four community banks has disappeared. We have 1,971 fewer of these small, local financial institutions today than at the beginning of 2008. Some 500 failed outright, with the Federal Deposit Insurance Corporation (FDIC) stepping in to pay their depositors. Most of the rest were acquired and absorbed into bigger banks….

In 1995, megabanks—giant banks with more than $100 billion in assets (in 2010 dollars)—controlled 17 percent of all banking assets.

By 2005, their share had reached 41 percent. Today, it is a staggering 59 percent. Meanwhile, the share of the market held by community banks and credit unions—local institutions with less than $1 billion in assets—plummeted from 27 percent to 11 percent. You can watch this transformation unfold in our 90-second video, which shows how four massive banks—Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo—have come to dominate the sector, each growing larger than all of the nation’s community banks put together.

Whatever one’s opinion of the bank shenanigans that precipitated the Great Recession, of “too big to fail,” or Dodd-Frank–whether or not you agree with Elizabeth Warren about the need for additional financial regulation–concentrations of power of this magnitude are cause for concern.

When that power is concentrated in large national banks removed from community relationships and concerns, the result is more foreclosures and fewer small business loans.

But perhaps the most important reason to treat the decline of community banks as a national crisis is that, while megabanks devote much of their capacity to activities that enrich their own bottom line, very often at the expense of the broader economy, local banks are doing the real work of financing businesses and other productive investments that create jobs and improve our well-being….

 While credit unions and small and mid-sized banks account for only 24 percent of all banking assets, they supply 60 percent of lending for small businesses.

The inverse is true of megabanks: they control 59 percent of the industry’s asset, but provide only 23 percent of small business loans. Given how much ground these giant banks have gained over local banks in the last seven years, it’s not hard to understand why small business lending has continued to shrink even as the economy has recovered.

Sometimes, bigger is better. Sometimes, it most definitely is not.


  1. Profits that can be turned into campaign donations are very important to the banking industry,

  2. PLEASE move all your banking to local or regional banks…Or Credit Unions. The only way to impact the Wall Street banks is to have NOTHING to do with them. No Credit Cards…. Nothing. They SHOULD be broken up but since that will most likely NOT happen, we can quit doing business with them. These folks do evil things. When our country was in trouble (Caused by their actions) they took public money at ZERO interest. Rather than helping American citizens, they bought US Treasury bills and made money from our government on money they got for free FROM our government. Then they gave themselves bonuses because they were so clever. NEVER will I do business with these crooks again. Local Credit unions and small or regional banks are the way to go. Don’t encourage these crooks.

  3. Sheila, this topic has long been one of concern for me. As I began to see the megabanks take over and investments in the local community decrease, I decided to bank with a credit union. I have not been disappointed.

  4. When I had to move back to Indianapolis in 2001, my Florida home sold quickly and buyers wanted possession in 30 days. Having banked at AFNB at 1200 North Arlington, then Bank One, and that bank being near the home I purchased, I wrote to the bank from Florida explaining my deafness, physical condition and short time frame. I was extremely surprised to receive an E-mail from the customer service rep, Billie. She explained that the bank was not on line; she contacted me from her home computer. We messaged back and forth; I sent the required amounts of money to open checking and savings accounts and explained the certified check amount to close on the house here. My son drove me here, we arrived on a Wednesday, the closing was scheduled for Friday morning. Early Thursday morning we went to Bank One; we met Billie who had my checking and savings accounts set up with books ready, my first box of checks and the certified check needed to close on my house. Mr. Potter would never have approved this:)

    Chase Bank bought out Bank One around 2004 and it was downhill from then on, beginning before they changed the name of the bank. I was lied to, received a number of incorrect monthly statements, a large amount of money to be put into savings was depostied into checking, one teller deducted $700 TWICE from my savings but deposted that amount ONCE into my checking account. Fortunately I had asked for my specific savings balance, knowing approximately what should be in the account. The manager immediately rectified the situation but…if I had not caught the “mistake” immediately I would have been out $700. The financial advisor recommended a special temporary account which paid high interest to place money from a Mutual Fund I cashed out. The montly monthly statement happened to arrive in the mail 3 weeks later – I had LOST $915.25 in that 3 week period. No mention was made in the advisor’s hand written notes to me that there was anything but the high interest rate, no mention it was an investment account. He “happened” to keep his notes rather than write in the notebook I always carry. I was so irate and loud that he escorted me out of his office the day I complained – two weeks later he was gone:) Regarding the large amount that was deposited in checking rather than savings, at that time the bank paid interest on checking accounts. My first bank statement after it had been transferred showed an $89 amount in my checking account with no information where it came from. The new customer service rep and I finally decided it must be interest from the large amount incorrectly deposited into checking. When my daughter, her name was on my account in case of emergency, was told that her house payments could be deducted from my accounts – we went in together to close out everything.

    Was any of this deliberate on the part of Chase Bank or is this typical incompetence for that institution? I am one person with no amount of money to be envied; how much are these big banks ripping off from wealthy depositors that they don’t even notice. The interest paid by my current bank, PNC, is embarrassing – even to the customer service reps. Those billions Bush handed over haven’t yet “trickled down” my way.

  5. Steroid Capitalism is what it is all about. Too Big to Fail, Too Big to Jail.

    Most of know California is in the midst of a severe drought. There are many users of water of in California. However two stand out – From the Guardian – The boss of Nestlé Waters has said the company wants to increase the amount of water it bottles in California despite a devastating drought across the state that has triggered demonstrations at the corporation’s bottling plant.

    Tim Brown, chief executive of Nestlé Waters North America, said the company would “absolutely not” stop bottling in California and would actually like to “increase” the amount of ground source water it uses.

    No surprise here – Walmart, which also bottles water in California, has refused to move its production out of the state. “The drought in California is very concerning for many of our customers and our associates,” a spokesman said.

    If it’s too big to fail, it’s too big to exist. That’s the bottom line.
    I introduced legislation in Congress that would break up banks that are too big to fail. Banking should be boring. It shouldn’t be about making as much profit as possible by gambling on esoteric financial products. The goal of banking should be to provide affordable loans to small and medium-sized businesses in the productive economy, and to Americans who need to purchase homes and cars. == Senator Bernie Sanders.

  6. For the past several years, I’ve served as a court-appointed facilitator in mortgage foreclosure settlement conferences between the mortgage holder and the home owner. I’ve seen Bank of America, Citi, Wells Fargo, et al. in action. For the summer after college, I worked at a local bank (that was later purchased by one of the megabanks, which itself was later acquired by another megabank).

    Too big to fail? How about too big to be competent?

    I do my banking with a local bank. They aren’t perfect, but at least when I need something I have someone I can call or a branch I can visit where people can actually find answers and make decisions. I saw the same thing when I worked for the local bank after college. People had authority, not the computer records. Customers were the focus, not the bottom line.

  7. The ban against across county line banking was probably wrong, but it worked, largely, as you note, because the bankers and their customers needed each other. Still, once consolidation did happen, we started a fight that’s happening in all areas of business – the war between size and service. Quite a few of the local banks (which had the option) opted out of consolidation, but almost all got back in that game at some level, because they couldn’t compete for the cost of capital. The question becomes, how big do you need to be to compete, and how big do you need to avoid becoming before personal service dissappears.

  8. Banksters exist because of a meme that we have fallen for because the pretty blond lady in the box in our living room told us a secret. Money can be made out of thin air. No risky R&D, no having to deal with worker and their scurrilous unions, no logistical nightmares, no retailors raking in huge shares of profits for little value added, and, best of all no quarlsome customers. Ship your money to Wall St and let MBAs scurry around reaching into other pockets and wealth can be created without creating wealth.

    We forgot to ask the pretty blond lady how wealth can be created from thin air but even if we’d asked the truth is she’d have no idea. Someone paid her to say it.

    There are now bankster gangs roaming Wall Street perfecting the biggist heist of all. Creating wealth in their pockets by taking from our tax pockets. Fraudulent welfare if the most expensive kind. Welfare kings and queens of the most destructive kind.

    My first banker looked exactly like a cartoon of a then prototypical banker. Herkimer Savings and Loan. I would reach up to his counter with my passbook and quarter or two (back then money was both hard to make and hard to the touch) and he would record his trustworthiness in my records and tell me how my quarters were helping my neighbors to buy a house.

    How quaint. How functional.

    We will be going back to those yesteryears the only question being when and how. By collapse and rebuild or by methodical transition.

    The banksters of course have so many cookies in their hands breaking the cookie jar is the only way to get them out.

    But the middle class makes the cookies with our labor and we can damn well change which cookie jars to put them in.

    While my first and favorite banker is now counting quarters in the sky I have found a good enough replacement here on earth and you can too. You don’t even have to sacrifice any service. They are still around. Feed them your cookies because when those too big to fail fail they will want to take as many bakers as possible with them.

    Money or cookies out of thin air? An illusion it turns out.

  9. When Pete Buttigieg ran for state treasurer his plan was to take money held in big bank accounts by the state and deposit it in local banks. As I understood his plan, the deposits would only be made if the banks promised to make investments and loans in their own communities and if they lived up to that promise. This would have solved the problem of small banks lacking the capital to compete with the big banks and would have been a terrific stimulus for the economy of the state. Unfortunately, we got Murdock, and you know how that went….( I seem to recall stories about him courting big banks for campaign contributions). I still think Pete’s idea had great merit and would have the added benefit of giving local citizens looking for local banks that would not end up being gobbled up by the big banks a place to feel confident about banking.

  10. Interesting topic. I left Fifth Third 10 years ago and switched to a local community bank in my small hometown in another state. There’s nothing like being able to email or call the bank president or the vice president, both high school classmates, and arrange a loan on the telephone or request their having a check ready for a local man to pick up in person after I’ve purchased a big ticket item for a residential property I still own. This community bank has all the Online bill pay features plus credit cards, mortgage loans, working capital loans, etc.

    For those here in Indiana, there’s Ameriana Bank with branches in Carmel, Westfield, New Castle, Anderson, Avon, Fishers, Noblesville, Greenfield, New Palestine. Freeze out the big banks by refusing to do any business with them.

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