Too Small to Fail
With the big guns in the financial services industry in turmoil, its a good time to ask hard questions about the nature of our finance system. Does bigger always mean better? Or does small-scale "relationship" banking, in which individual savers and borrowers are members of the same community, help to make a better banking sector? Community banks and credit unions were regarded until recently as vestigial players in a new world of global consumer finance. But today they arent merely doing well; they also seem to have a lot to offer. In this event, New America and the Washington Monthly explore ways to encourage the health and number of small-scale financial institutions as a means of thwarting the tendency toward excessive consolidation in financial services and restoring a mutuality of interest between borrowers and lenders. By encouraging thrift, responsibility, and a sense of community, small-scale financial institutions could play a leading role in digging out from the current recession and avoiding the next one.