Wednesday, April 01, 2009

Rumors From the Bank World

Seems that the FDIC examiners are playing by new rules.

Friends in the bank biz tell me that FDIC examiners are red-flagging ANY loans using commercial real estate as collateral--even if the loans are performing (making payments), and regardless of the amount loaned vs. the value of the property.

This forces banks to write down (or write off) those loans--which, in turn, could force the banks to acquire additional capital OR to stop lending entirely until the CRE loans are paid off.

One interpretation is that the FDIC is requiring an overabundance of caution.

Another is that FDIC wants to trigger another bank-bailout event.


1 comment:

Shoebox said...

Another is that they are actually out in front of the next shoe to drop, something they completely missed on this go around.