Ms. Rehm, your article on
I have been explaining to our boards that nothing will change until relief is given to the front line examiner who is held accountable for being too soft on a bank if it later fails or becomes troubled. There is no upside for them to apply an evenhanded approach much less ever give the bankers, who know their community, the benefit of the doubt.
This problem is exasperated in Michigan, our home base, where not only are community banks shell shocked, but the larger institutions will not lend in the state, and in fact, incent their lenders to decrease loan portfolios. Michigan is left with a circumstance where the largest banks hold a majority of deposits, yet are not investing back in the communities. Community banks are forced to take high reserves against some of their best and oldest customers because the examiners are box checking. We have been forced to write-off performing loans, where the customers have never missed a payment, due to collateral shortfalls. You know the spiral that this type of behavior starts, the losses/reserves increase, capital goes down, ability to attract capital more difficult, etc. There is no one left to lend in Michigan, which makes economic recovery even more challenging.
Community banking is absolutely critical to our future. I hope that, at some point along the way, the message is not only received in Washington, but that steps are taken to implement a solution at the examiner level. A thinking and analytical examiner, with actual authority to do so, would be a welcome relief!
Cristin K. Reid
Corporate President
Capitol Bancorp Limited
