By: SR

SR — Thu, 28 Apr 2011 14:35:50 +0000

Banks need to wake up and stop trying to justify the lack there of their over site that they have used in not only approving these type of loans but the continued monitoring of their loan portfolio once the credit is booked. Generally speaking, banks will blame their defaults or problem assets on the economy, but in reality, when you boil it down, they were putting to much emphasis on the collateral / projections and not enough consideration given to their clients liquidity positions or current cash flow capabilities. When you take into consideration the “smaller bank’ mentality, in reality, they should have never gone down the road and allowed themselves to be so heavily conventrated in construction, land development and speculative real estate investing. It does amaze me that banks, once a credit is booked, does not obtain ongoing financial documentatioin from their clientele to monitor the changes in their clients financial capabilities or for that matter, if they do acquire the documentation, just file the paperwork away without actually reviewing said documentation for current trend analysis. Unfortunately, the caliber of employee in todays current baning environment is a mix of old school collateral minded lenders or new school who do not have the real world experience or knowledge to make sound credit decisions. Banks need to be held accountable for their credit decisions and stop blaming the economy on their current financial state. Only when banks not only have the correct processes and procedures in place to undewrite and montior their loan portfolio but actually follow the very process and procedues that they have put in place, will this baisc issue be less of a concern.

Comments on: Main Street Act would let banks delay reporting losses

By: SR