FOR IMMEDIATE RELEASE
Contact: Virgil McDill, vmcdill@ilsr.org, 202.294.9187
Statement from the Institute for Local Self-Reliance on Today’s Reintroduction of the Bank Merger Review Modernization Act
WASHINGTON, D.C. (September 30, 2021) – The following statement was issued by Stacy Mitchell, co-director of the Institute for Local Self-Reliance, in response to legislation reintroduced today by Senator Elizabeth Warren (D-Mass.) and Representative Jesús “Chuy” García (D-Ill.) that would ensure greater regulatory scrutiny of mergers in the banking and financial services sector.
“Independent businesses are the lifeblood of a thriving, resilient economy. But today, more small businesses across the country are closing than opening. Decades of failed antitrust policies are driving this trend, but lax banking regulation and a highly concentrated financial system are also a key factor contributing to the collapse of thousands of small businesses.
“This problem was particularly acute at the height of the pandemic, as ILSR’s research showed that fewer small businesses received federal relief loans in states dominated by big banks. ILSR’s analysis found a strong correlation between the number of loans issued in a state and the relative strength of that state’s small local banks.
“The concentration of our financial system is only getting worse. As community and local financial institutions disappear or merge with larger banks, more entrepreneurs and business owners are struggling to obtain the capital they need to start and grow their businesses. The problem is particularly acute for businesses owned by people of color and those in rural communities. In the past five years, only 23 percent of Black-owned businesses were able to access credit from a bank, compared to 46 percent of white-owned businesses.
“We need a financial system that works for small businesses, consumers, local communities, and workers. To get there, Congress needs to fundamentally restructure the banking system to create more local financial institutions and reduce the size and market dominance of the megabanks.
“Sen. Warren and Rep. García’s Bank Merger Review Modernization Act is a welcome step toward achieving this goal by ensuring regulators apply greater scrutiny and end the practice of rubberstamping bank mergers.”
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About the Institute for Local Self-Reliance
The Institute for Local Self-Reliance (ILSR) is a national nonprofit research and educational organization founded in 1974. ILSR has a vision of thriving, diverse, equitable communities. To reach this vision, we build local power to fight corporate control. We believe that democracy can only thrive when economic and political power is widely dispersed. Whether it’s fighting back against the outsize power of monopolies like Amazon or advocating to keep local renewable energy in the community that produced it, ILSR advocates for solutions that harness the power of citizens and communities. More at ilsr.org
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