Tuesday, February 09, 2010

Community Banks Respond to Feds' FooFooDust

This is not news, but the battle is escalating. The Administration and FDIC, the Fed, and the Comptroller of the Currency (not to mention State regulators) are all taking shots at banks, while the Administration is emitting........ahhhh........rhetoric which places the blame for lending problems in the laps of the bankers.

Well, the banks are tired of taking the flak.

Wisconsin bankers said Monday they are hopeful - but not confident - that regulators will ease what they contend are overly aggressive policies that discourage lending to small businesses.

The main national regulators of banks, including the Federal Reserve and the Federal Deposit Insurance Corp., issued a joint statement Friday expressing concern that lending to small businesses has declined. The agencies said they are working "to ensure that supervisory policies and actions do not inadvertently curtail the availability of credit to sound small business borrowers."

After the Crash of '08, FDIC examiners went ballistic.

Here's the effect:

Bankers assert regulators sometimes have been downgrading the collateral value of loans on which payments still are current only because nearby property has gone into foreclosure. That kind of pressure from regulators can force banks to write off loans and cut funds to some small businesses that otherwise could make it, bankers said.

When banks are forced to write down collateral, they are also forced to restrain lending.

Then the President blames the banks.

Gee. Obama? Blaming someone ELSE?

Who'd-a thunk it?

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