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By Kyle Irwin, Christopher Williston VI

The recent failures of Silicon Valley Bank and Signature Bank have raised important questions.  The American public is rightly asking – “what happened to these banks,” “why are we bailing out these banks’ depositors,” and, “is my money safe?” 

Hidden in the debate and sensationalist reporting over the last two weeks is a much deeper question – what kind of banks do we want and need?   

Representing the vast majority of banks in the United States (more than 85%), community banks share a focus on caring for their local communities and small businesses.  They work hard to protect the hard-earned money of their friends and neighbors.  They originate more than 60% of loans to small businesses and 80% of agricultural loans nationwide.  These loans are often personalized to meet the unique needs of borrowers.  In short, community banks do the things that the largest financial institutions cannot and do not do. 

We saw this demonstrated in the pandemic era.  In the first crucial weeks of the Paycheck Protection Program, Texas banks originated more loans to small businesses than any other state, including California.  As Texas has the most community banks in the U.S., that data point is not surprising.  Community banks have always been the economic first responders when disaster strikes.   

When pundits ask if we’d be better served by having a few large government-backed banks, they demonstrate their lack of understanding of what drives our economy.  The American dream dies if opportunity is locked in the hands of a few national banks, far removed from customers. 

Recent events in New York and California do nothing to change this truth.  This is the story we all need to hear as we consider the future of our banking system. 

Kyle Irwin is the current Chairman of the Board of Directors of the Independent Bankers Association of Texas.  Christopher Williston, VI serves as the association’s President and Chief Executive Officer

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