The article "Fed Up with Talk, Bankers Try Reining in Regulators" really has me fed up.
For over 37 years I have been a community banker. Every day I read about yet another new regulation. The sentence that really got to me was "Although modified loans are typically treated as nonaccrual for six months..." That did it for me.
Isn’t there anyone left in government who understands the concept of loan classifications?
A modified or restructured loan is just that, identified and listed as "restructured." Then there are the classifications: pass, special mention, substandard, etc., and any specific reserve that may be required.
If the borrower is making regular monthly payments that include interest, principal and escrow (if required) then it is not "non-accrual for six months..." three months, or one month. The borrower is making interest payments!
Hello. Is anybody out there?
When did insanity take over our industry? It's bad enough that spinmeisters try to make the public believe that Wall Street equates to banks, or that Congress had nothing to do with the worst financial collapse since the great depression. Spin can never change the fact that at one of the congressional hearings a congressman lambasted an auditor for warning that Fannie and Freddie were operating in an unsafe and unsound condition.
I have worked with a hundred regulators and examiners over the years, wonderful individuals doing a very tough job and doing it well. Asking Congress to intervene is not the way to go. Fourteen trillion in debt and we're asking them to help? Where is the logic in that?
Perhaps the answer is to shake some common sense into the organizations creating accounting rules, federal regulations, best practices and so on. Many of these regulations may sound good on paper, but in practice, just don't make common sense or demonstrate good business judgment.
Does anyone remember the in-substance foreclosure?
Chairman, president and chief executive officer
NorthEast Community Bank
White Plains, New York