UNO study: Community banks on the decline

UNO study: Community banks on the decline

BATON ROUGE, LA (WAFB) - The days of walking into a locally-owned bank where everyone knows your name could soon be over. A new study reveals federal regulations are hurting those banks, which thrive in Louisiana.

To stay afloat, bankers are counting on a change in Washington.

Bank industry stakeholders say they are used to a laid back approach when it comes to doing business with customers. They call it relationship banking, but community bankers fear economic and regulatory changes over the last decade. Lower interest rates at big banks are moving people away from small town institutions.

"We've known our people, our customers, generationally and sometimes the rules prevent us from taking care of the customer," said Catahoula-LaSalle Bank COO Paul Tweedy.

Finance and Economics Professor Dr. Kabir Hassan confirmed those fears in a study he did on national and regional trends in baking. The study found in the past 20 years, the number of community banks has decreased by more than 50 percent, while the bigger banks only fell by just over 17 percent.

"Unless you do something specific to safeguard the community banks, at the same time letting the market operate... it's going to affect small business lending and the local community," said Kabir Hassan, PhD.

He says t could result in bank mergers and higher interest rates on small business loans and mortgages. US Senator David Vittter, who chairs the Senate Small Business and Entrepreneurship Committee, says he is taking Dr. Hassan's results to Washington as proof community banks are worth saving.

"We do have senate majorities who agree with this point of view," said Sen. Vitter. "It's a matter of moving legislation, getting some Democrats on board and sending it to the President's desk."

Vitter says he is hopeful they will pass regulatory reform for smaller banks through the Senate Banking Committee in the next few months. Tweedy and his colleagues say Louisiana's economy is depending on it.

"During the Great Depression, we survived because of our communities, the people in our communities know communities," said Tweedy.

Bank industry stakeholders were also encouraged to write letters to lawmakers highlighting their concerns.

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