December 29, 2008
Small banks forced to cut back. The Wall Street Journal has a great piece today about how community bankers are being forced to resist their inner Jimmy Stewart. As the economy sours, local bankers, who are often a lifeline for entrepreneurs, are tightening lending standards and forgoing the relationship-based deals they’re known for. Here’s an interesting tidbit: “Some community bankers say their regulators are leaning on them to be tougher on borrowers. At CorTrust Bank National Association in Mitchell, S.D., President Jack Hopkins says his federal regulator, the Office of the Comptroller of the Currency, in September required that in lending to commercial real-estate developers, he must demand more capital if projects stall. The new rules have discouraged some would-be borrowers, he says: ‘When you show them what you’re expecting, they back away pretty quickly.’”
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