The Other Banks

The New York Times has an article about community banks dealing with bad reputations because of the bank bailout. And it makes for a pretty good read, reminding readers that despite the wavering national discussion about bank health, many a community bank is (and has been) doing solidly.

From one aggrieved local bank official in Indiana: “The media, Congress, the president, everyone just keeps saying ‘the banks, the banks, the banks,’ like we’re all the same thing…Well, we’re not all the same thing.”

Another, protecting his brand of business, says, “Banking should not be exciting…If banking gets exciting, there is something wrong with it.” Reporter David Segal characterizes the response as “an ethos squarely at odds with the risk-addicted style of megabanks,” and then fleshes it out:

Though they greatly outnumber the national and regional banks, community banks have barely registered in any of the fallout from the credit crisis, in part because they hold less than 10 percent of the $13.8 trillion in bank assets nationwide.

The 50 or so bank failures have been largely clustered in a few states, like Florida, Arizona and California, where the bursting housing bubble had the greatest impact.

In states like Indiana, where property values never soared, community banks have been rock solid. The last failure in the state was in 1992.

With 7,630 community banks across the country (and many of them rushing to reassure customers of their health or broadcast the fact that they didn’t take TARP funds, and embarking on PR campaigns like “Safe, Strong Secure”), this is no insignificant sliver of the story, and it’s good to see it get some light—particularly when we still have anecdotes like this one: one banker in Segal’s article, whose bank didn’t take any bailout funds, describes going on vacation and being asked, “So, traveling on that bailout money, huh?”

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Jane Kim is a writer in New York.