As America watched two large banks fail over the past few weeks, we’ve seen a mad dash of businesses and individuals to ensure their money is actually safe in the bank. Perhaps what’s scariest to us all is having to confront a tough uncertainty: what does safe actually mean? Banking somewhere too big to fail? Keeping deposits under the FDIC insurance limit? Banking where a small percentage of deposits are over the limit? Learning about exotic products outside the banking system? It’s enough to make your head spin, and your wallet ache.
These unfortunate events have left community banks caught in the crossfire of a banking system struggling to save itself. Community banks generally are smaller institutions with less than $10 billion in assets, according to the Federal Reserve, that serve local community needs such as providing checking and savings accounts, home mortgages, auto and small business loans. They often have lower fees and serve a limited geographic area. Community banks typically pride themselves on their deep commitment to local businesses, home ownership, and other local finance provision. That means that they generally avoid controversial industries like fossil fuels and private prisons, focusing more on the deployment of funds to fulfill community needs.
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