This article was produced by the Institute for Local Self-Reliance, as part of itsCommunity-Scaled Economy Initiative, which produces research and partners with a range of allies to implement public policies that curb economic consolidation and strengthen locally owned enterprise.
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.
To illustrate this disturbing trend and highlight a few of the reasons we should treat it as a national crisis, we’ve published atrove of new graphs. These provide a startling look at the pace of change and its implications. In 1995, megabanks—giant banks with more than $100 billion in assets (in 2010 dollars)—controlled 17 percent of all banking assets.