http://online.wsj.com/article/SB125737628347529375.html Well, Regulating and promoting credit do not go hand in hand... WASHINGTON -- Politicians are putting pressure on regulators to ease up on small community banks across the U.S., a move some say could increase the cost of cleaning up the financial crisis. Last week, House Financial Services Committee Chairman Barney Frank (D., Mass.) sent a... [more]
http://online.wsj.com/article/SB125737628347529375.html
Well, Regulating and promoting credit do not go hand in hand...
WASHINGTON -- Politicians are putting pressure on regulators to ease up on small community banks across the U.S., a move some say could increase the cost of cleaning up the financial crisis.
Last week, House Financial Services Committee Chairman Barney Frank (D., Mass.) sent a letter to the country's top bank regulators, including Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair, urging them to "show some temperance in their regulation of traditional banks." One common complaint from lawmakers is that regulators' tough examinations are making banks reluctant to lend.
[barney frank and bank regulation] Associated Press
House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., asked regulators to "show some temperance in their regulation of traditional banks."
"A self-fulfilling prophecy of community bank failures, shrinking credit availability and a slower economic recovery can all result from a regulatory overreaction to the current crisis," said the letter, which also was signed by Rep. Walt Minnick (D., Idaho).
Some former regulators say the efforts resemble efforts made by lawmakers in the early 1990s that prompted bank examiners to relax the rules at the height of the savings-and-loan crisis. That prolonged the life of some weaker banks and let them dig deeper financial holes.
"Whenever they start to put pressure on the regulator to ease up on supervisory standards, it is a slippery slope," said John D. Hawke, Jr., who served as U.S. comptroller of the currency from 1999 to 2004.
The political pressure "makes the problems worse," said William Black, a former federal bank regulator who is now an associate professor at the University of Missouri-Kansas City School of Law. "It prevents markets from clearing
[less]
Response by Riversider
over 16 years ago
Posts: 13572
Member since: Apr 2009
And Sheila Bair's response....
The debate spilled into the public at a congressional hearing in late September. Rep. Tom Price (R., Ga.) told Ms. Bair he wasn't "convinced that the FDIC isn't contributing to the awful problems that we're having" in his state, where 20 banks have failed in 2009. The banks "dot every "i" and they cross every "t" and then the knock comes on the door on Friday afternoon," he told her.
Rep. David Scott (D., Ga.) asked Ms. Bair to review her agency's approach to the state of Georgia "to work with a plan to see if we can't stop this very terrible pattern."
Ms. Bair told lawmakers she was "painfully aware of the concerns and the drama of the stuff." But, she said, "if an institution has insufficient capital and then cannot raise new capital, there's not much we can do about it."
And Sheila Bair's response....
The debate spilled into the public at a congressional hearing in late September. Rep. Tom Price (R., Ga.) told Ms. Bair he wasn't "convinced that the FDIC isn't contributing to the awful problems that we're having" in his state, where 20 banks have failed in 2009. The banks "dot every "i" and they cross every "t" and then the knock comes on the door on Friday afternoon," he told her.
Rep. David Scott (D., Ga.) asked Ms. Bair to review her agency's approach to the state of Georgia "to work with a plan to see if we can't stop this very terrible pattern."
Ms. Bair told lawmakers she was "painfully aware of the concerns and the drama of the stuff." But, she said, "if an institution has insufficient capital and then cannot raise new capital, there's not much we can do about it."
zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz