It's been many years since the term "lender liability" became an urgent topic among bankers. But now it rears its head again.

In its original form, "lender liability" meant that a bank could be held liable for certain actions that were imposed upon a borrower by a lender in the course of a lending relationship. If such actions imposed by the lender resulted in harm or financial loss to the

It seems to be an article of faith among bankers that a strong loan policy is the ultimate defense against poor asset quality.

Bank supervisory agencies have been diligent and consistent about the need for strong policies and internal controls.

So why do we continue to hear about persistent anecdotal evidence of significant if not serious asset quality issues?

For the second time in nearly twenty years, some bankers, especially those with significant real estate loans in their portfolios are saying that the examiners are being too tough on bank asset quality. "We know our customers better than they do, and we know they will pay."

Credit committees are an enduring fixture in banking.

The advantages are many and obvious including communication, training of junior lenders, constructive group thinking, monitoring of loan policy compliance and the like.

But are there also negatives?