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A Two-Tiered System Of Regulation Is Needed To Preserve The Viability Of Community Banks And Reduce The Risks Of Megabanks, Arthur E. Wilmarth Jr.

GW Law Faculty Publications & Other Works

The financial crisis of 2007-2009 and its aftermath have accelerated a consolidation trend that has transformed the U.S. banking system during the past three decades. During that period, the number of community banks and their share of the banking industry’s assets have fallen by more than half, while the largest banks have captured much of the industry’s assets. In responding to the financial crisis, the federal government encouraged further consolidation by adopting extraordinary assistance programs and forbearance measures designed to ensure the survival of the biggest institutions. In contrast, federal officials gave little help to community banks and subjected them …