The Government Accountability Office ("GAO") conducted a study of the effects of changes in regulation on community banks and credit unions and their ability to serve small businesses. In the report, prepared for the Chair of the House of Representatives Committee on Small Business, the GAO concluded that changes in the regulatory environment had a modest impact on community banks, particularly as compared to the macroeconomic and local economic environment. However, the GAO found limitations in the data that community banks report to regulators, specifically that the data do not capture lending to small businesses, and captures loans only by their size, and not that of the borrowing entity. The report recommended that the bank regulators improve the data that they collect.
Commentary / Steven Lofchie
In a report notably lacking hard conclusions, the most notable observations were not even on the report's intended subject. The number of community banks and credit unions declined by 24% and 22%, respectively, from 2010 to 2017, continuing a trend that had been in place since at least 2001. Further, the report strongly suggests that this trend is likely to continue. This would indicate that the closing or merger of banks is likely to be the most significant issue that regulators will face in the coming years. Query whether this trend will be accelerated by FinTech?
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