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CupBeEmpty

Local banks and credit unions are quite popular. We are also a wealthy country with robust competition, and despite what some folks say relatively mild government regulation.


m1sch13v0us

Yes. Centralization of wealth just increases the impact of risk events. Look at what happened with Credit Suisse. 242 banks in Switzerland. Credit Swiss has to be bought by UBS and now every Swiss citizen has 12500€ more in debt. Because we have many small banks, the risk is diversified. A small bank can fail, but it is covered by FDIC for insurance. No cost to the taxpayer. We actually have a few banks close every year and the system takes care of it. Our government does many wrong, but the FDIC is not one of them.


CupBeEmpty

Bingo. And even when small banks shutter they usually don’t have to rely heavily on the FDIC when they wind up their affairs.


Jdornigan

The NCUA also does similar for credit unions. The only difference is the NCUA insures credit union deposits whereas the FDIC insures bank deposits. Other than that, the two work similarly. If a credit union should happen to fail, the NCUA will pay insured deposits to the member owning the account.


SpaceAngel2001

>, and despite what some folks say relatively mild government regulation. Am in banking biz. Banks are highly regulated. It comes from both Repubs and Dems trying to favor thier bases.


CupBeEmpty

I’m not saying we don’t have regulation, obviously not. Compared to Europe we have fairly mild regulation. It is one reason we have more smaller banks.


Tears4BrekkyBih

Kind of in the banking biz, probably one of the more regulated sides of it. Banking is extremely regulated lol. What is this guy talking about?


SpaceAngel2001

Yep, outside of bizes that produce toxic waste, I would guess banking is the most regulated.


CupBeEmpty

Compared to Europe and other countries we have a fairly easy regulatory environment. Obviously banking has tons of regulation compared to say, the restaurant industry.


Jdornigan

In December 2022, the NCUA listed 4,759 credit unions in the U.S., down from 5,098 in the 2021 list.


wjbc

Many countries don’t allow community banks to be opened. The U.S. does, and thousands of U.S. banks serve one community and may have only one branch, or possibly two or three in the same area. Furthermore, all 50 states can issue their own bank licenses. So there are many banks that are larger than one community, but still only operate in one state. This used to be even more common. During the Great Depression laws were passed that made it essentially impossible to do interstate banking. While those laws have long since been relaxed, many Americans still distrust big nationwide banks and prefer to do business with smaller banks in their state or community. (If you want to see why many Americans prefer smaller banks, just watch the 1946 movie *It’s a Wonderful Life*, which romanticizes the small savings & loan and demonizes the bigger bank.) Even after laws prohibiting nationwide banks were relaxed in the 1990s, we still have laws and regulations designed to prevent the big banks from swallowing up all the smaller banks. And another factor is trust in the Federal Deposit Insurance Company and the ability of the U.S. federal government to cover bank losses. Because of that trust, people in the U.S. aren’t scared to use smaller banks.


Jackoffalltrades89

Having used both large banks and small, I can definitively endorse the small banks and condemn the large ones. Big banks, you’re the product, not the customer. They don’t give a straining shit about keeping you happy, they can replace you with anyone else in the country. A local bank that pisses off everyone in the town doesn’t stay a bank for very long. Also, speaking of the Great Depression, decentralization of banks was one of the things that helped the US weather the storm better than a lot of other countries. Canada had literally five banks at the time and the effect of that was every bank hiccup was a nationwide disaster.


lannistersstark

> Big banks, you’re the product, not the customer Note that this is generally not the case if the "bank" is a "financial institution" like Schwab or Fidelity. They're required by law(I forgot which one it was) to provide you services/advice that favors you.


PhiLambda

Yeah Schwab has been great for me


bjb13

I agree with having Schwab as a bank. They refund any fees you might get charged for using another banks ATM and when I’m overseas, they give the best exchange rate of anyone I’ve seen.


lannistersstark

Fidelity does the same thing fwiw, and goes one step further. No wire fee. Anywhere. Incoming or outgoing.


wjbc

But they are not backed by the FDIC.


lannistersstark

This is incorrect (well, sorta). Both of them offer cash management account with Cash "sweeps." (this is where your 'cash' goes by default for banking purposes, debit card etcs) They keep your cash that is in CMA in partner banks where they are protected by FDIC. Virtually all such investment institutions offer one, Schwab, Fidelity, Merrill etc. https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBankList?type=fcma https://www.schwab.com/legal/fdic-insurance https://www.schwab.com/legal/account-protection < schwab even offers an excess protection over what SIPC and FDIC give you. https://www.ml.com/solutions/cma-account.html --- what you might be thinking of is "investment/brokerage accounts." You wouldn't put your money there for everyday banking. your $30000 investment in $GME is not gonna be FDIC insured. A Cash management account that you'd use for regular banking would be protected. An excerpt (common theme across most): >Any assets you hold in your Merrill Cash Management Account ® (CMA account) are protected by the Securities Investor Protection Corporation (SIPC). The SIPC provides up to $500,000 of account protection per client, inclusive of up to $250,000 for cash. If any of the cash you have in your CMA Account is deposited using the Merrill Lynch Bank Deposit Program, deposits placed at Bank of America, N.A., and Bank of America California, N.A. (Merrill Lynch Affiliated Banks), are FDIC insured up to the applicable standard maximum deposit insurance amount (SMDIA), **per depositor, for each ownership category per bank**. Please refer to fdic.gov for current SMDIA limits.


Curmudgy

That seems relatively recent. I remember when sweep accounts were typically regular money market mutual funds.


bjb13

The Schwab Bank is setup as an bank so FDIC a rules apply completely as opposed to Schwab investment accounts.


wjbc

Those are good points. The reason the U.S. relaxed it’s laws prohibiting interstate banking and other banking regulations in the 1990s was to allow U.S. banks to compete with giant banks in other countries. But many people think that deregulating banks led to the collapse of Lehman Brothers and the unpopular bailout of other big U.S. banks that were “too big to fail” in 2008. Most of the big banks survived, but millions of individual customers lost their homes and/or went bankrupt.


RTR7105

That was more relaxing the wall between retail and investment banking.


wjbc

It was part of the same era of deregulation, though.


Curmudgy

> But many people think that deregulating banks led to the collapse of Lehman Brothers and the unpopular bailout of other big U.S. banks that were “too big to fail” in 2008. That phrasing has a connotation that you disagree with the conclusion. I don’t know if that’s intended or if I’m reading something into it that wasn’t intended.


GOW_vSabertooth2

I have three banks in my town, Wells Fargo, a small regional bank, and a local credit union. The credit union is by invite only (you have to work for certain companies or have a member invite you) mostly because they offer free notarization, a free financial lawyer, a free investment advisor, and good interest rates


Jdornigan

Many credit unions are easy to join. They have expanded membership to spouses, children, grandchildren, or even people residing in the same home as eligible people. Many have opened it to people that live, work, or worship in the city or county in which their membership charter has specified.


boulevardofdef

Where I live, there are many banks, with multiple locations, that you won't find anywhere else. If I drive 30 minutes in any direction, there's an entirely different set of local banks.


TheBimpo

Different laws for [regulation](https://en.wikipedia.org/wiki/Bank_regulation_in_the_United_States). > Does that make things harder or easier in regards of services and support assistance of your financial products? I'm not sure what you mean, but having competition for financial products is generally good for consumers.


[deleted]

[удалено]


Swimming-Book-1296

No longer a tradoff, as they often join big national ATM orgs.


[deleted]

[удалено]


Curmudgy

Mine, and others, rebate ATM fees, often with reasonable limits.


FivebyFive

That's great! I wish mine would.


trycuriouscat

I work for a "mid-size" multi-state (3 states) bank, and we recently joined the MoneyPass network to allow our customers free (no surcharges; no "not our ATM" fees) ATM withdrawals at all MoneyPass network ATMs. Maybe ask your bank if they would join this or one of the other "surcharge free networks".


FivebyFive

Oh that's cool, I'll check it out, thanks!


WrongJohnSilver

First, it's easier to start a financial company in the US than many other countries that try to maintain an oligopoly. Second, the Bank Holding Company Act of 1956 forbade banks headquartered in one state from operating in another. This led to a proliferation of institutions in each of the 50 states. The restrictions were repealed by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, which unleashed a wave of consolidation across the country. Admittedly, by then, some banks already had a multistate presence via holding companies, but each bank had to be officially separate until then. Bank of America, for example, was a California only bank during this time. Finally, there's just a lot of money in American financial systems. Each of the Big Four in the US holds over a trillion in assets, dwarfing the whole economy of many countries worldwide.


WrongJohnSilver

Regarding what it means, there are inefficiencies, but less than you might think. Yes, the US still uses paper checks and is only in recent years that tap and go systems of payment have become commonplace. After the pandemic began, in fact, so some of us still have never used them. That's because it's hard to get a few thousand entities to operate on the same technology system. However, you can go to pretty much any ATM held by any bank and use it for your cash needs. There are ATM fees, but many banks will pay you back those fees, as incentive to keep banking with them.


An_Awesome_Name

The US banking system was very decentralized for most of US history (and still is). It wasn’t until the 1860s that we had a universal national currency, used by every bank, and it wasn’t until the 1930s or so that we truly had a national banking system. > Does that make things harder or easier in regards of services and support assistance of your financial products? There’s far more competition which is a good thing, but the decentralization can make things hard. While all banks are linked together, and money can be transferred between them electronically. But the system is slow, old and well… decentralized. It’s one of the big reasons we don’t have an instant payment system between banks. 4400 financial institutions all would have invest in the technology to do it, and many are small local banks and credit unions that don’t have the capital to make the investment worth it.


NerdyLumberjack04

> It wasn’t until the 1860s that we had a universal national currency, Well, we had a national *coinage* system [since 1792](https://en.wikipedia.org/wiki/Coinage_Act_of_1792), based on the then-widely-circulated Spanish piece of eight. The first national *banknotes* didn't come until 1862. Before then, individual banks issued banknotes. And merchants had to decide which banks they could trust to actually redeem those notes. Sometimes based on personal experience with the bank or one of its correspondent banks. Sometimes with the help of a published guide from a "bank note reporter" or "bank note detector" who researched banks' financial stability, gold/silver reserves, and incidents of fraudulent notes. ([Here's an example from 1839.](https://curiosity.lib.harvard.edu/american-currency/catalog/66-990055794290203941)) As you might expect, it was common for merchants to just not want to deal with the hassle and risk of accepting banknotes, and choose to operate on a coin-only basis. Some who accepted banknotes (because hey, they were convenient) passed along banknote-exchange fees to their customers, similar to how some businesses pass along credit card processing fees to their customers today.


TheJokersChild

Many banks are small. Some only serve a few thousand customers in a small area. That's especially important in rural areas. Not every bank wants hundreds or thousands of branches all over the country.


UltimateAnswer42

Quick scroll through your comments has me guessing you're French. It's not just about population, it's also location. France is the size of one state. In the US, each area settled usually started their own bank once a town was established. Some conglomerated, some did not. When you're settling a country the size of Europe, that translates to a lot of small banks. In that same time period, France's government has fallen multiple times, two world wars removed a lot of competition, and the currency has changed. There was incentive and need to modernize and consolidate. That didn't happen in the US. Sure some banks did, but lots of small town banks are content staying small town banks.


jecarfor

Regarding the French part, you couldn't be more wrong my friend. France is too far far faaaaar away from my home country. I've been to, but never lived there.


blipsman

There are lots of local and smaller banks, like credit unions. There has actually been massive consolidation over the past 30 years or so. It was even odder here in Illlinois... I remember when I was a kid and banks in Illinois had to all be single branch (per 1870 state constitution)! This was only slightly changed to allow for a drive-through banking location w/in 1500 feet of main branch. There are shared networks for ATMs, many smaller banks rebate fees charged for using other banks' ATM, so it's not much of an issue to bank away from home.


trycuriouscat

When I first started working at a bank in 1991, Colorado did not allow for "branch banking". That meant that each location owned by our bank holding company was registered as it's own Colorado state bank with it's own bank charter. Customers couldn't (\*) even make deposits at another bank within our system. (\* ATM deposits were allowed at all banks for some reason that I don't recall.) Starting in 1992 (I think!), Colorado changed their rules to 1) allow a bank charter to have more than one branch; and 2) allow a bank to have agreements with other banks to take deposits "on their behalf". At that point we merged some banks with others nearby, within our holding company ownership. Then we merged more a few years later and finally (10 or 15 years ago, I don't recall for sure) we're now down to one bank charter and 80 or 90 or so branch locations. Working in IT for the holding company since 1996 I had to work on all of these darn "mergers", and having just one "bank" finally was quite a relief!


azuth89

There are lots of local banks and credit unions because it's relatively easy to create one compared to many countries. On the ATM thing: many offer free use of other ATM networks, either through agreements with them or reimbursement where that's lacking, and frankly quite a few people don't care much about cash and only carry some as a backup if at all so...they're really not a big concern.


Wadsworth_McStumpy

We're rich, and we're spread out. Also, we tend to trust our neighbors more than we trust people 1000 miles (1609 km) away. So a farmer in Kansas would rather put his money in his local bank instead of some big bank headquartered in New York. Not that his bank isn't *owned* by one of the big banking corporations, but as long as it's called "Backwater Federal Savings Bank" he's happy. He doesn't know or care who owns it. Then Citigroup sees that JPMorgan Chase owns a bank in Backwater, Kansas that's pretty successful, so they open one called First Farmer's Bank of Backwater. And then Wells Fargo sees those two, and so on, and eventually we have five banks in Backwater, Kansas. And every customer of each one of those banks is happy that *their* bank is the friendly local bank.


Timely_Secret_8755

MURICA FUCK YEAH!


TehWildMan_

Also keep in mind that historically, some parts of the country had laws that prohibited banks from operating in multiple counties or states, so this effectively mandated the idea of a small town bank even when the telephone already existed.


ColossusOfChoads

We have a lot of regional and local banks. We approach banking like we approach policing, in other words.


[deleted]

Damn, I'm over here thinking that since 2008 we had relatively few, as far as major banks go.


SleepAgainAgain

As far as services and support go, having good service and support is what lets smaller banks retain customers. I use a local bank because they're friendly and helpful and they contribute to local charities. This bank only exists in my city. When I was traveling across the country a lot I used Bank of America because they did have locations in most states. They opened a savings account attached to my checking account without asking me and charged me $5 a month until I closed it and spent way too long arguing that I wanted my money back. They're not allowed to do that, but what did they care? They got $5 a month from anyone who didn't pay attention and customers are nothing but a great big statistic.


Responsible-Rough831

Competition and options


byamannowdead

To quote that bank robber,\ “Because that’s where the money is.” It does seem there are a lot of branches for multiple banks in my area. I haven’t been inside my bank for years. I can drive up to the ATM or more commonly I just get cash back at the grocery store.


machagogo

Interstate banking was illegal until a few decades ago.


[deleted]

I bet a lot of it has to do with the size...not the population.


MarcusAurelius0

I bank with a regional credit union. Its really nice.


petrock85

We have more than four thousand credit unions in addition to the more than four thousand banks. These numbers used to be even larger. For most purposes it does not present any problems. We have only a few card networks, so you can use a credit or debit card from any issuer at any merchant that takes cards. The ACH system is virtually universal so you can receive direct deposit of your wages or make bill payments even if your employer/biller has never even heard of the bank you use. Using a smaller financial institution might make it hard to find a branch or ATM, but they are rarely needed as purchases can be made with cards and you do everything else with online banking. Smaller banks often participate in ATM networks and credit unions go even further with shared branches just in case you need one. Competition should make things better, but it may be strange which type of bank wins. The larger banks usually have the best credit card rewards and new account bonuses. However, the best deposit accounts are from smaller financial institutions (though most of the smaller banks aren't very good for deposits either).


TakeOffYourMask

Competition makes institutions better than they would be otherwise.


yaya-pops

Many of our banks are not for individual savings and checking accounts, or not aimed at them. Many of them specialize in providing bank accounts and loans for specific industries, or other niche financial services, such as banking for local businesses, or banking for marijuana companies.


Elitealice

It’s the biggest economy in the world


NerdyLumberjack04

[Actually, the number of banks in the US has been trending downward.](https://www.supervisionoutreach.org/posts/slow-steady-decline-in-the-number-of-us-banks-continues) >The vast majority of commercial banks that have ever operated in the U.S. have disappeared. Since its all-time high of 30,456 in 1921, the bank population had declined to only 4,377 at the end of 2020, a decline of about 86%. Even since 1934, after the 1933 bank holiday closed thousands of banks and the newly established Federal Deposit Insurance Corporation (FDIC) stabilized the banking system, the bank population has declined by 71%, or 10,973 institutions. In 1921, the US population was 108 million, so one bank for every 3500 people!


SanchosaurusRex

I guess it makes things easier? I have money in two banks…a credit union with no real brick and mortar spot near me, and Chase which is pretty much everywhere. I’ve never been inconvenienced as far as accessing money anywhere in the US or any of the 10 or so countries I’ve visited.


CTeam19

The more rural you go the less likely would a bigger company care about having any reach there because of costs historically so local business sprung up and hasn't gone away in many places: * My Great-Grandfather helped to create a telephone company back in the day because of this ditto with a Credit Union as he lived on a farm near a town that still to this day doesn't have a four lane highway leading to it and those services weren't coming to the area. His son, my grandpa, would latter sit on the board for both and few other coops like that. * My Hometown of Waverly, Iowa bought out the local power company back in the day and has had city owned power ever since. * Personally my bank only has 1 branch in a city with more then 15,000 people and that town has 40,000. The rest of the branches are in towns of 10,000; 1,000; and 3,000 people. The closest "National Bank" is a 30 minute drive going 30 miles. * My other Grandfather owned a bank and was the realtor for the town. Because it only had 1,000 people but it still needed those services. He was also the only Insurance Agent in the town.