Would the financial system have gotten into the mess it did if all the banks in the U.S. were small fry? President Obama seems to think not. He even gave a shout-out to "responsible lenders, including community banks, doing the right thing" in his Lehman Brothers anniversary speech. Leaders of big banks don't agree of course. But the numbers, at least for the moment, bear out the president's thinking on the subject.
The economic crisis is still taking its toll on the banking industry. So it is too early to say for certain that small banks did a better job than big banks. Defaults on loans to small businesses and commercial real estate projects — which make up a relatively bigger chunk of smaller banks' books — tend to lag the corporate sector.