It looks as though financial reform, while protecting consumers in many ways, could have a negative effect on the community banking system as more power is given to the Federal Reserve to regulate how banks do business. At least, that’s the thought of Sarah Wallace, chair of the board of directors of First Federal Savings and Loan Association in Newark, Ohio.
She expressed in a recent WSJ article that with all of the changes likely to occur, less credit will be available, costs will increase and those who are considered creditworthy will be less able to take out loans. As a result, it is possible that even more small community banks will fail (Wall Street Journal).
