Partners Alexander J. Callen and William Stern write about how more than 1,000 new banks were formed in the eight years before the Great Recession began in 2008, according to the Federal Deposit Insurance Corp. In comparison, the past 15 years have seen a relative drought of de novo bank formation, with around six new banks beginning operations since Jan. 1, 2024. The slow pace of new bank formation in recent years has been attributed to the lengthy regulatory process, regulatory inertia, and unclear or unreasonable expectations for business plans and capital levels, among other factors. With the change in presidential administration earlier this year, bank regulators may be more receptive to eliminating or streamlining regulatory barriers that have historically stood in the way of de novo bank formation.
Read the Law360 article for more.