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When is Big Too Big?
Dianne Daiss Felton, Chairman of the Board
After partially disclosing the findings of its "stress tests" of the nation's biggest banks, the government made another disclosure: none of the 19 largest will be allowed to fail. That means taxpayers are going to be paying billions for bankers' bad decisions made over the past decade.
Government has made a determination that the consequences of allowing some banks to fail would be unacceptable. Maybe they're right, but quite possibly, they also are perpetuating the cycle that got us into this fiasco.
The American public can avoid a future repeat of this scenario only if they understand what it really means to be "too big."
I'm sure you share my discomfort when some people lump all banks into the same category--"greedy and reckless." As employees and owners of a community bank that has been successful for more than 100 years, we know that many banks have succeeded for decades by employing a simple formula: Do the right thing for customers and employees, and they'll do right by you. While never realizing extraordinary profits in boom cycles we operated profitably enough to retain capital for the inevitable rainy day. For us it was enough to get through the Great Depression, and through dozens of other boom and bust cycles. We're still here because we've remained a trusted financial partner to the customers and communities we serve.
It is useful to look at those banks dubbed "too big to fail" -- yet failing nonetheless-- and learn from the important lessons they offer about what it really means to be "too big":
Finally, too big is when a bank forgets where it came from and who got it there; its employees, depositors, communities and investors. No bank can ever be too big if it keeps that firmly in mind.
I thank all the employees of Mechanics Bank for committing their personal best every day, and keeping us strong and profitable for more than 100 years!