There were more than 12,000 U.S. banking institutions as recently as 1992, but deregulation and global competition have fed the rise of megabanks like Bank of America (BAC) and JPMorgan Chase (JPM).
At the same time technological and regulatory shifts have made it harder to make a living as a small banker, fueling a feeding frenzy by bigger players at the expense of the smallest banks. The U.S. bank count slipped below 8,000 this year for the first time ever.
"The most regrettable unintended consequence of some of the quickly written regulatory reform, we believe, will be the inevitable 'de-banking' of the U.S. financial system," she writes in a report that warns that bank profits are in "structural decline."
The comment comes as the Federal Deposit Insurance Corp. prepares an update on the health of the banking industry, which has been plagued by a surge in failed banks and only recently returned to substantial profits, at least at the biggest institutions. The FDIC's list of banks at risk of failure, due out Tuesday morning, is expected to approach 900, up from 829 at the end of the second quarter.
But Whitney notes that problem banks are far from the only problem. The ranks of the unbanked will rise to 41 million households in 2015 from 30 million now, she says, as bankers reconsider the costs and benefits of all manner of products.
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