Canandaigua National Bank & Trust (CNB), for instance, has 25 branches across a 65-mile area in upstate New York. Many of the banks that have survived serve small towns and rural communities. On May 1st the latest failure, First Republic, was scooped up by America’s biggest bank, JPMorgan Chase. Bank failures, especially during the savings-and-loan debacle of the 1980s and the 2007-09 financial crisis, as well as mergers have since driven down numbers. Having so many banks makes America an outlier among developed countries, but by historical standards the current number is low: in 1921 America had well over 30,000 banks, and as recently as 1984 it had almost 15,000. Not until 1994 were they allowed to open branches outside the state in which they were chartered or had their main office. The government tried to stabilise America’s financial system with the Federal Reserve Act of 1914, which gave America its first central bank in almost a century. As many as 1,600 banks issued their own banknotes. The 19th century was awash with banking crises. Alexander Hamilton established a sort of central bank in 1791 it lasted just 20 years, as did its successor, which closed in 1836. Early Americans’ suspicion of federalism translated into suspicion of big banks and a national banking system. Their detractors get one thing right: the large number of American banks-over 4,100 at the end of last year, compared with 325 in Britain and some 80 in Canada-is an artefact of history. For many small businesses and farms, however, these banks are a vital source of credit. Some may wonder about their future, if more banks get caught up in the crisis that began with Silicon Valley Bank. They account for as much as 97% of the total number of America’s banks, but less than 14% of assets and deposits. Some see such institutions, generally defined as having less than $10bn in assets, as inefficient historical relics.
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