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New Regulations Are Strangling Community Banks

May 8 (Bloomberg) -- The wave of new banking regulations that Congress created to deter and punish Wall Street’s misdeeds is landing with much greater impact on the U.S.’s almost 7,000 community banks than on the too-big-to-fail lenders.

Community banks didn’t cause the financial crisis; they played by the rules. Because of their time-tested business model, one based on customer relationships rather than transaction volumes, community banks aren’t a threat to the financial system. Yet they are being forced to pay a penalty in regulatory costs -- to comply with rules aimed at preventing the bad behavior on Wall Street from happening again.