The U.S. government may have the ability to prevent the nation's community banks from going the way of the corner drug store. If legislators and federal agencies want to stop bank consolidation from diminishing the ranks of small lenders, they must relax the government's iron-clad grip over 6,046 community banks that today control less than 10% of the country's banking assets.
As my last BankThink piece explained, smaller community banks are having an increasingly difficult time competing against larger rivals that enjoy the advantage of scale. The growing profitability gap between banks with under $1 billion in assets and banks with over $1 billion in assets is likely to lead to a spurt in mergers between 2014 and the end of this decade.
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