A recent survey conduced by the Illinois Bankers Association revealed that more than one-third of community banks in the state are debating selling or merging due to burdensome regulations.
All of the banks in the state were surveyed last year to get a feel for how regulations were impacting business, HousingWire.com reports. Out of the 584 banks with headquarters in Illinois, 160 responded.
The House Financial Services Committee held a field hearing in Chicago on Monday and listened to community bankers testify that costly regulations under the Dodd-Frank Act are causing them to cut back on lending.
Regulatory compliance for smaller bankers is more than double what it is for larger firms, William Bates, the executive vice president of Seaway Bank and Trust Co., said, according to HousingWire.com.
In Illinois, 423 banks hold less than $250 million in assets. Since 2008, regulators have shut down 47 banks in the state. In addition, another 28 smaller banks in Illinois were forced to merge into larger firms.
"Without quick and bold action to relieve some of the regulatory burden, there will be a contraction of the banking industry, with banks disappearing from communities over the next few years," Bates said, HousingWire.com reports. "Each bank that disappears from the community makes that community poorer."