The Colorado Bankers Association (CBA) based in Denver, has boldly begun
pushing back against federal overregulation, which many banks feel is
the cause of choking of lending.
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
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
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]