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Lessons Learned From The Financial Crisis Regarding Community Banks

Thursday, June 13, 2013 - 9:24 AM
From the FDIC website, a statement of the Federal Deposit Insurance Corporation by Richard A. Brown, Chief Economist, on Lessons Learned from the Financial Crisis Regarding Community Banks before the Committee on Banking, Housing, and Urban Affairs of the United States Senate

[...] the Study found three primary factors that contributed to bank failures in the recent crisis, namely: 1) rapid growth; 2) excessive concentrations in commercial real estate lending (especially acquisition and development lending); and 3) funding through highly volatile deposits. By contrast, community banks that followed a traditional, conservative business plan of prudent growth, careful underwriting and stable deposit funding overwhelmingly were able to survive the recent crisis.

 
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pearlbrownpearlbrown1,356 posts since
Nov 2, 2010
Rep Points: 5,955
1. Thursday, June 13, 2013 - 6:09 PM
By conventional wisdom, smaller is safer (e.g., smaller overhead, ease of monitoring).  But this only holds if Government does not pour tons of money into large banks.
1
51hh51hh1,461 posts since
Jan 16, 2010
Rep Points: 6,350
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