Regulating Angels

Since the Financial Crisis, a common narrative casts the largest, too-big-to-fail (TBTF) banks as villains1 and community banks as darlings. On the one hand is the image of the infamous mega banks that brought the economy to its knees and continue to profit while the rest of society sputters, and on the other hand is the angelic community banker (think Jimmy Stewart in It\u27s a Wonderful Life) working tirelessly to provide the last bastion of hope for small, job-creating, businesses and other worthy borrowers. Advocates for these innocent small banks point to the crushing regulatory burden imposed on institutions that had nothing to do with the crisis. Accordingly, the considerable political power of community banks has been harnessed in a press for regulatory relief. These advocates predict the demise of community and other small banks if the regulatory burden is not lifted. Some view such predictions with a more skeptical eye and suggest that the interests of large banks are behind community bank reform proposals. These critics claim that the big banks are attempting to slip under the community bank halo with the hope of less regulation for all banks-big and small