Unlike banks on Wall Street, these smaller banks didn’t invest in risky mortgage-backed securities or complex derivatives.
Tony Avelar/The Christian Science Monitor
In fact, many are actually thriving and still making loans to help to grow local businesses and keep families in their homes.
Think of it as a modern-day version of “It’s a Wonderful Life” – the 1940s movie in which local banker George Bailey gives up his own dreams to save his hometown from greedy businessman Mr. Potter.
Today, there are more than 7,000 community banks that are small, community oriented, and determined to keep their assets local.
They’re the Main Street banks, which, unlike those on Wall Street, did not invest in risky mortgage-backed securities or complex derivatives. And so their balance sheets remain relatively healthy.
While they account for less than 10 percent of America’s total banking assets, their traditional, values-based approach contains plenty of lessons for their larger Wall Street counterparts, some analysts say.
Some also question the wisdom of allowing a few big banks to control large percentages of the US banking sector.
“Mr. Potter must be spinning somewhere in his celluloid grave,” says John Steele Gordon, a business and financial historian in North Salem, N.Y. “The community banks are doing well because they were willing to adhere to sound banking principles. They didn’t get caught up in the Wall Street craze and were less driven to keep those quarterly earnings going up and up and up.”
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