Too small to fail: while the behemoths of Wall Street stumble and fall, humble local banks are doing just fine, thank you. Their surprising resilience holds a key lesson for twenty-first-century global finance.

Summary

---

Wall Street

See the full content of this document

Extract

---

Too small to fail: while the behemoths of Wall Street stumble and fall, humble local banks are doing just fine, thank you. Their surprising resilience holds a key lesson for twenty-first-century global finance.

[ILLUSTRATION OMITTED]

When Paul Hudson, the chairman and CEO of Broadway Federal Bank in Los Angeles, speaks of the current financial crisis, he sounds altogether placid. 'It s going to be difficult, because everybody participated in this low-cost-credit, high-value-asset scenario," he says. "But I'm not overly stressed." It helps that his own bank is doing fine. Broadway Federal, founded in 1946 to provide loans to the growing African American community of Los Angeles, is a small institution with five branches located in middle-class, largely black neighborhoods of the city. It has eighty-four employees, assets of $390 million, and a loan portfolio divided more or less equally among single-family homes, apartment buildings, churches, commercial real estate, and small businesses.

Aesthetically, Broadway Federal's branches are more evocative of 1972 than of 1946--copious concrete, cheap terrazzo, fluorescent lights, clunky logo. But in 2008, an old-fashioned look--even one from the '70s--can be an advantage, for it suggests old-fashioned banking. While Broadway Federal may have been less adventurous or less profit...

See the full content of this document

---