The number of banking institutions in the United States has fallen to its lowest level since at least the Great Depression while overall bank deposits have more than quadrupled since the 1980s.
Federally insured institutions across the country dropped to 6,891 in the third quarter, falling below 7,000 for the first time since federal regulators began keeping track in 1934, the Federal Deposit Insurance Corp. (FDIC) disclosed.
The number peaked at more than 18,000 in the 1980s.
The decline in the number of banks has come almost entirely among smaller banks, those with less than $100 million in assets. From 1984 to 2011, more than 10,000 banks ceased to exist as a result of mergers, consolidations, or failures, the FDIC reported.
From 2008 to 2012, 465 banks failed, while only 10 failed in the five prior years.
At the same time, overall bank deposits have risen from around $2.3 trillion in the mid-1980s to around $9.6 trillion this year.
The falloff in the number of smaller banks "is raising alarms among boosters of community banks, who say such lenders which represent the vast majority of U.S. banks are critical to the economy because they are more likely to make small-business loans," The Wall Street Journal observed.
The number of new startup banks has also dwindled in recent years. Every year from 1934 to 2009, investors chartered at least a few and sometimes hundreds of new banks. But since December 2010, only one new startup has been chartered a bank that opened earlier this month in Bird-in-Hand, Pa.
According to The Journal, the reluctance to open new banks "stems from slim profits and rising regulatory costs as Washington tries to ensure banks won't fail en masse as they did during and after the 2008 financial crisis."
BTW, the FDIC insures bank deposits in case the bank goes bankrupt or gets robbed so the customer won't lose all of his money. Also, it keeps the bank from having to pay should the worst happen. The FDIC did not exist when the Great Depression began in 1929, which is why millions of Middle and Working Class Americans lost all their money when many banks closed up.
What does this mean to us? It means the day of the neighbourhood bank is gone. The small family owned banks are dying one by one. They can't compete with the mega banks such as BofA, Wells Fargo/Wachovia, Chase, and Citibank.
The big banks are kind of like "The Blob". They absorb the little banks and get bigger and bigger and more and more out of control. Too bad we can't freeze them and drop them in the Arctic like they did in the movie.
It's the same with the family run store. They can't compete with Wal-Mart, Target, K-Mart et al. The giants are gobbling up the little guys. Guess what? WE'RE THE LITTLE GUYS!
Folks, NS Germany had free enterprise. There was capitalism, but not Judeo-Capitalism. Companies were strictly regulated by the Reich Economic Office so they would not become monsters such as we have today. The system worked. People could make a good profit, but not obscene profits. They could become rich, but not super rich. And you can believe that's one of the top reasons Judeo-Capitalists fear a return of National Socialism. They don't want anything to restrict their unbridled pursuit of profit.
Unless we can control these financial monsters, they will continue to grow out of control until they collapse in on themselves (and take us with them) or gobble up everything around them (including us).