Tuesday, March 2, 2010

From global to local: banking crisis trickles down to small-town banks

A story on NPR's All Things Considered this afternoon reported on the high rate of bank failures in the state of Georgia. These failures of so-called community banks sometimes leave communities without local financial services. While the county on which the story focuses, Henry County, is a fast-growing exurb of the Atlanta Metropolitan Area, the story also features anecdotes from a rural corner of that county, Locust Grove, population 2,322. An excerpt follows:

Among the shops here is Heather Bledsoe's store, Heather's Flowers, which stocks flowers and consignment wedding dresses.

Locust Grove got several hundred thousand dollars of federal stimulus money for streetlights, brick walkways and building facades. But, Bledsoe says, businesses here are not getting loans. She started her store with her own savings last spring, renting space downtown. When the building came up for sale, Bledsoe wanted to get a loan to buy it, but her bank had failed and others offered no help.

The story closes with these comments--predicting an unhappy future for community banks and their small-town customers.

Community banks are vital to small towns — they make the loans that create many new jobs. But given the current conditions, economic experts say it's likely two dozen more community banks will fail in Georgia this year.

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