Banking Agencies Urge Responsible Lending
Lending by community banks is an important piece of the economic recovery, but it must be done in a way that "avoids past mistakes and does not create new ones," said Kevin Bertsch, the associate director of the Federal Reserve's division of banking supervision and regulation.
Bertsch and officials from other regulatory agencies testified at an August 16, 2011, field hearing in Newnan, Georgia, and addressed concerns that overly conservative bank examinations are making it difficult for community banks to lend. They also discussed recent community bank performance amid still-tough economic conditions.
Community banks under strains
Pointing to ongoing questions about whether examiners have been overly restrictive of bank's activities, Bertsch laid out several steps the Fed has taken in the past several years to ensure "a balanced approach to supervision."
The Fed, along with other federal banking regulatory agencies, has issued examination guidance stressing the importance of taking a balanced approach. For instance, in February 2010 the Fed and other regulators issued a joint statement on lending to creditworthy small businesses, he noted. The Fed has also put in place training programs for examiners and outreach programs for bankers emphasizing the importance of sound lending practices.
Ensuring consistent supervision
August 31, 2011