Eileen Ambrose highlights some of the serious problems that small banks are facing and their efforts to combat obsolescence by engaging in mergers ("Maryland's smaller banks may be headed for a wave of mergers," Dec. 7). While her article hits many important points, it fails to convey the true irony of the situation: Banks that have done business the right way are being punished by government regulators, instead of rewarded by the market for their sound lending.

Despite maintaining a conservative lending profile and shying away from the lucrative but unstable subprime loan market during the housing boom, small banks in New Jersey and across the nation are increasingly being forced to pay for the mistakes of their larger cousins.

Low interest rates, constrictive new regulations on capital reserves, and lending requirements have made it increasingly difficult for small banks to conduct business and provide loans to their local communities. These lending barriers hinder the growth of small businesses, the real engines of a strong economy.

Matthew Glans, Chicago, Ill.

The writer is a senior policy analyst with The Heartland Institute.

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