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Looking for a Job? Start a Bank

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Community lenders thrive while big-time competitors struggle to stay alive.

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Now's the time to put that old cliché, "necessity is the mother of invention," to the test, because we desperately need banks. Lots of them.

Most of the ones we have are essentially insolvent, surviving primarily on generous donations from the American taxpayer. Outraged about the AIG (AIG) debacle? How about Bank of America (BAC), which made 2 horrendous buyout decisions that nearly torpedoed the bank - Countrywide in late 2007, then Merrill Lynch just a year later. Nevertheless, B of A still received hundreds of billions in government guarantees, cash, and loans - and CEO Ken Lewis still has his job, despite running the company into the ground.

Meanwhile, banking clients are seeing credit lines chopped, fees increased, services suspended, and interest rates reduced to just a shade more than a slap in the face.

As a result of the competition just to stay alive, opportunities in the banking sector are substantial. So substantial, in fact, that both Goldman Sachs (GS) and Morgan Stanley (MS) morphed into bank holding companies late last year. The move was partly to allow the struggling firms to tap government-backed debt markets, but also to take advantage of the impending void in the country's banking system.

Far away from the ivory towers of lower Manhattan, a few intrepid bankers are seeking to profit from these troubled times by founding small community-focused lenders. And although just 78 banks opened their doors in the past 12 months, compared to 173 the year before, demand for their services is through the roof.

The public's growing wariness of Wall Street and large, impersonal banks is a boon for local banks and credit unions, where familiar faces, not fine print, greet customers at the door. Likewise, upstart banks can begin fresh, not only with customer relations but with squeaky clean balance sheets, devoid of the toxic assets weighing down most of their more established competitors.

But opening a bank is far more difficult than just renting some cheap retail space and buying a couple ATMs. Regulators, under heavy fire for their failure to perform even the most modest oversight duties, are making it well nigh impossible to get a new bank up and running. Capital requirements in particular are tough to meet, since most potential investors reflexively seize up at the sound of the words "invest" and "banks" when uttered in the same sentence.

Further, seasoned management must be brought in, preferably with a clean resume. Try finding an experienced banker these days who won't have to explain why he or she played no part in his or her former employer's demise.

Recessions, despite their lousy reputation, foster creativity, innovation and entrepreneurship. Risk-takers can separate themselves from the herd and create real productivity in an environment where merely surviving is seen as pretty damn good.

The opportunities in banking are just a few of the many currently being made available to those willing to take the plunge. It isn't easy -- in fact, it's a neverending slog -- but these are times when fortunes can be made.
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No positions in stocks mentioned.

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