Community Banks: Too Small To Save?

Writing yesterday in National Review Online, Prof. Tanya Marsh, at Wake Forest University School of Law, reviews the detrimental impact of the Dodd-Frank Act ("DFA") on community banks. Her essay is a must-read for anyone involved in the financial services industry.

Prof. Marsh's principal argument is that DFA imposes a "one-size-fits-all" regulatory scheme that fails to distinguish between traditional community banks and banks with a regional or national footprint. She identifies the added expense of this regulatory burden as a major driver in accelerating the disappearance of community banks and makes the case that the number of Americans who are "underbanked"-estimated by the FDIC to be 20% of U.S. households-will increase as access to basic financial services provided by community banks becomes harder.

Her call for Congressional action is certainly appealing, albeit short on specifics. Nevertheless, her essay echoes the concerns that I have heard...