Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
0 of .
Results for:
No results containing your search query
P. 1
American Bankers Association Letter to White House

American Bankers Association Letter to White House

Ratings: (0)|Views: 614 |Likes:
Published by FOXBusiness.com

More info:

Published by: FOXBusiness.com on Dec 22, 2009
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less





December 21, 2009
The PresidentThe White House1600 Pennsylvania Ave., NWWashington, DC 20500Dear Mr. President:As we all look for ways to help the economy continue its recovery, the American BankersAssociation wishes to share several ideas for enabling community banks to make moreloans. Of course, banks cannot manufacture loan demand where there is none. But inthose markets where banks have opportunities to expand their lending, the followingsteps could remove unnecessary impediments.
1. Do not use distressed sales prices when valuing performing loans.
Someexaminers reportedly are directing banks to write down the value of collateral based ondistressed sales prices. This classification of performing loans
creating the anomalous
“performing non
 performing” loans – 
can set in motion a downward spiral for the borrower and ultimately the bank, as the bank requires more collateral or more equityfrom the borrower, the borrower cannot meet the new requirements, the loan defaults, and
another property is dumped into an already depressed market. The bank’s capital gets
depleted as a result, which in turn curtails the amount of new loans the bank can make.While the banking agencies recently issued potentially helpful guidance on commercialreal estate workouts and are working on appraisal guidance, the heads of each of theagencies must be vigilant in their efforts to ensure that examiners are not beinginappropriately conservative in their reviews of bank assets.
2. Rationalize the rules governing brokered deposits.
This issue has two components.First, the current rules governing brokered deposits treat certain deposits
such as thoseswapped by banks that are part of a network like CDARS
as brokered even though thedeposits are generated largely from core deposit customers and perform like coredeposits. As a result, community banks are discouraged from competing for larger deposits that could provide the funding for new loans. The brokered deposit rules should
not hamper a bank’s ability in this way.
Second, examiners are criticizing banks for using brokered deposits even though suchdeposits often are cheaper and more stable sources of funding than deposits obtainedthrough other sources. Where a bank is using brokered deposits to fund rapid growth,examiners are right to be concerned. But criticizing deposits solely because they are
 brokered hampers a bank’s ability to obtain low
cost funding and thus limits the bank’s
ability to make loans. The regulators should not discourage banks from using brokeredCDs in a safe and sound manner.
3. Consider all insured deposits as core deposits.
Examiners continue to view deposits between $100,000 and $250,000 as non-core deposits, notwithstanding deposit insurance
Edward L. Yingling President and CEOPhone: 202-663-5328Fax: 202/663-7533E-mail: eyinglin@aba.com
World-Class Solutions,Leadership
 Advocacy Since 1875 
1120 Connecticut Avenue, NW Washington, DC 200361-800-BANKERS www.aba.com

Activity (7)

You've already reviewed this. Edit your review.
1 hundred reads
1 thousand reads
cekastle liked this
techi4scribd liked this

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->