| Loan Policy and Loan Losses�A Weakened Link? |
|
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?
The problems of the very large banks and their involvement in subprime lending do not appear to be related to the problems community and smaller regional banks are facing.
What is missing from the traditional equation of "strong and consistently applied policy equals strong and consistent asset quality"? Even the cursory comparisons to earlier times, especially the mid-to-late 80s in oil and gas and real estate lending, don't seem to shed much light on the current malaise. Will there be some corporate and reputational wreckage that needs understanding here and now before our industry can truly begin to heal?
About Ed O'Leary:
O'Leary began his banking career at The Bank of New York in 1964,
and worked at banks in Florida, Texas, Oklahoma, and New Mexico. He
served as a faculty member and thesis advisor at ABA's Stonier Graduate
School of Banking for more than two decades, and served as long as a
faculty member for ABA's undergraduate and graduate commercial lending
schools. Set as favorite Bookmark
Email This
Trackback(0)
Comments (1)
![]() Write comment
|