Comments for Bank credit standards: Do we have any left? (January 4, 2008) at http://www.ababj.com , comment 0 to 2 out of 2 comments http://www.ababj.com Wed, 22 May 2013 15:39:54 +0100 FeedCreator 1.7.2 http://www.ababj.com/lending/bank-credit-standards-do-we-have-any-left.html#pc_399 We bankers must be among the dumbest people in the world. During every economic downturn, we learn lessons, most of which are not very new since we learned the same lessons in the previous downturns, and we say intently “never again.” Then when things cycle upward again, we yield to competition and begin to stretch terms, pricing, underwriting and policy. Comes the next downturn, we will behave similarly. It seems to be our nature. This time the savagery by the regulators left a particularly bloody playing field and my guess is that the next time will be different only by degree. - Neal Davies Sat, 03 Apr 2010 12:44:06 +0100 http://www.ababj.com/lending/bank-credit-standards-do-we-have-any-left.html#pc_341 Amen. Somewhere in the mid-90s, those banks that used to actually train lenders in credit fundamentals....stopped doing it. Everyone switched to the "hunter and skinner" model....lenders became "deal guys"....hardly even originating loans....instead...getting them "pre-packaged" from brokers. At the same time...banks credit standards evaporated..."yeah, that appraisal is a little old...but everyone knows property values have gone up". They looked more intently for reasons to make a loan...rather than understanding the critical elements of the credit and whether the borrower would ever actually be able to repay the loan if anything at all went wrong. The sad news is.....many bank loan portfolios still have loans that will go bad over the next several months. The crisis is not over...and I don't really think banks learned anything from it. Everyone wants to blame sub-prime loans, or the economy or bad luck....rather than inept and inadequate underwriting and portfolio monitoring. But....that's just my opinion. - Ken Proctor Mon, 08 Mar 2010 21:42:40 +0100