Regulator Stresses Loan Underwriting

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ORLANDO, Fla.-Regulators in this state, hit hard by the economic downturn, are pledging to work with credit unions to sustain recoveries, but also noting certain red flags simply must be addressed.

"Our role as a regulator is not just to present a glove with an iron fist. At times that's required, but it's a cooperative effort," Robert Hayes, bureau chief at the Office of Financial Regulation told a group of credit union leaders at the League of Southeastern Credit Unions' annual meeting here. "There is no cookie cutter that is going to fit every situation and everybody. When we do an examination we want to look at your institution individually."

OFR Commissioner Tom Cardwell somberly noted that this is the lowest ebb financial institutions have seen over the course of his 40-year career. State examiners are likely to make more frequent visits and more carefully scrutinize balance sheets, but the regulator pledged to avoid being overly burdensome while still addressing critical bottom line issues.

"I see our relationship between the regulator and the regulated as symbiotic. We do well when you do well and our desire is for you to do well," Cardwell said. "The work that is done by you and the community financial institutions all over is probably the key to where we are economically. [Getting] the economy back on its feet is dependent on how well we do on the Main Street level."

While pledging to work with the state's institutions, Hayes said, "If you haven't underwritten your loans properly, if you're offering products or services you don't understand or aren't managing well, in this economy that's a red flag and we're seeing issues that arise from that that are going to take quite some time to work out," he said.

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