Colorado Bankers Association Urges Easing of Bank Regulations
Don Childears, president and CEO of the CBA, participated in a telephone conference with 15 of his peers is bankers associations in various states concerning the stifling effect of overregulation. As a result, Childears moved forward by sending out various documents to CBA members, as well as public officials in Washington, D.C.
As part of his campaign, Childears has also begun speaking about the issue to newspapers, special district associations and other organizations across the state.
Childears said that a part of the problem is that in the chaos of the last third of 2008, many non-bank lenders, which supplied about 70% of U.S. credit, were eliminated. This reduced the options that many potential borrowers had, forcing them to rely more on bank lending when their creditworthiness is impaired.
Politicians and the public are calling for increased lending. At the same time, regulators are requiring banks to raise capital ratios well above the 10% that traditionally has been considered “well-capitalized.” Banks with high concentrations of commercial real estate (CRE) loans are being asked to raise their levels the most, and to reduce their CRE exposure to 300 % of capital.
Colorado is especially hard hit by capital ratio requirements, because the economy relies heavily upon real estate. The banking industry CRE average is 320% of capital. To get the entire industry down to 300% would mean a substantial reduction statewide of at least $2.4 billion in CRE loans. According to Childears, that would result in a 6% reduction in CRE lending at a time when borrowers are trying to obtain more credit
It is unknown where the present campaign will lead.
[Source: Renee McGaw, “CBA leads effort to east bank regs,” Denver Business Journal, 10/9/09]