The Endless US Banking Crisis: A Shaping Force on the Economy.
The US has more than 4,000 small banks, more than any other country in the world, due to branch banking laws that made it illegal to operate a bank out of more than one building. The federal deposit insurance system in 1934 stabilized the banking system and helped small banks compete with bigger banks. Small banks enable lending to be tailored to particular communities, but they can also pose risks, as seen in the recent failures of three lenders.