NEW YORK (10/8/10)--Regulatory compliance costs have tripled for small financial institutions, including credit unions, with the new financial overhaul law encompassed in the Dodd-Frank Act, The Wall Street Journal said Thursday. “In the aftermath of the financial crisis and the bailouts, the banking industry has become more polarized,” wrote David Weidner in an article titled, “Too Small to Fail; Banks Can Drive an Economic Recovery. No, Not Those Banks.” “Four banks control a combined $7.34 trillion in assets and $3.57 trillion in deposits--56% and 39% of all U.S. assets and deposits respectively, according to SNL Financial. “The rest is scattered about nearly 7,800 banks and nearly as many credit unions,” Weidner added. “Yet, those roughly 15,000 institutions must succumb to the bulk of the Dodd-Frank Act’s changes. Compliance costs have tripled for those smaller banks, according to Louis Hernandez Jr., CEO of Open Solutions Inc., a bank technology-consulting firm.” Hernandez argues against the old saws of bigger-is-better banking, in his new book, “Too Small To Fail: How the Financial Industry Crisis Changed the World’s Perceptions,” Weidner wrote. “Small banks, despite the 829 banks on the Federal Deposit Insurance Corp.’s problem bank list, are generally in good shape even though the vast majority of them didn't ask, take or qualify for bailout funds,” he added. A diminishing number of banks servicing small communities is hitting the West and Northeast areas of the U.S. especially hard. Community banks there control only 11% of assets, according to the Community Bankers Association. In those regions, a paucity of competition or incentive in lending is holding back growth, Weidner wrote. Therefore, small businesses and individuals in those regions have to depend on national and regional banks for credit, he added. Although large banks may be lending more, “the one-size-fits-all credit standards employed by national banks remains a high hurdle for many borrowers,” Weidner wrote. “We are stuck in a world where big banks set the course for the industry, and the smaller banks are forced to pay the price for their transgressions. Yes, the banking industry has changed since the financial crisis. It has become bigger and less competitive,” Weidner concluded. Credit unions want to raise their member business lending cap to 27.5% of total assets from the current level of 12.25%. CUNA statistics show that would inject $10 billion in new funding into the economy and create as many as 100,000 new jobs, at no cost to taxpayers.