That is the topic of my latest Bloomberg column, the community banks are likely to be good, here is one excerpt:
I think of community banks as enjoying relatively high levels of trust. Millions of Americans have walked through the doors of their local banks and dealt with the loan officers, tellers and account managers, giving the business a human face. A community bank cannot serve a region without sending out a fair number of foot soldiers. Banks tend to have longstanding roots in their communities, and a large stock of connections and accumulated social capital.
In turn, community banks have converted this personal trust into political clout. There are community banks in virtually every congressional district, and these banks have developed the art of speaking for many different segments of American society, not just a narrow coastal elite. When these banks mobilize on behalf of a political cause, they are powerful, as illustrated by the likelihood that they will get regulatory relief from the Dodd-Frank Act, probably with bipartisan support. They have such influence that one member of the Federal Reserve Board must be a community banker, even though few economists see much rationale for this provision.
Given their usefulness, it would be wrong to describe community bankers as a stagnant sector of our economy. Still, the same features that make them trusted and politically powerful also make them unlikely to be major sector disruptors.
Already you can see a problem shaping up, as perhaps the faster-growing, higher productivity gain companies will have less experience. And indeed often the very dynamic, big tech companies are not so good at public relations:
Alternatively, let’s say you were designing a business that, whatever its other virtues might be, would not be very good at public relations.
First, you would make sure the business had come of age fairly recently. That would ensure the company didn’t have a long history of managing public relations, learning how the news media work, figuring out what it will or will not be blamed for, and rooting itself in local communities.
The next thing you might do is to concentrate the company’s broader business sector in one particular part of the country. That would ensure that the companies’ culture didn’t reflect the broadest possible swath of public opinion. Better yet, don’t choose a swing state such as Pennsylvania or Ohio, but rather opt for a region that is overwhelmingly of a single political orientation and viewed by many Americans as a bit crazy or out of touch. How about Northern California?
There is much more at the link. The clincher of course is this:
And we have been building a political system that favors the time-honored company rather than the radical innovator.