Link

-- Deb M. (vmcclell@columbus.rr.com), March 08, 2000

Answers

{Fair Use, for Educational Purposes]

"Greenspan warns bankers about loans Lending standards assume current boom will go forever"

By Rex Nutting, CBS MarketWatch

"SAN ANTONIO, Texas (CBS.MW) -- It's not just the stock market that's been too optimistic, it's also banks, Alan Greenspan warned Wednesday."

"Most bad loans are made in the good times," the Federal Reserve chairman reminded the Independent Community Bankers of America. The text of his remarks was made available in Washington." "Community banks have survived and prospered even as the industry undergoes consolidation and transformation, he said."

"However, "I would be remiss ... if I did not first point out some of the risks that still are lurking," Greenspan told the bankers, pointing to a "troubling trend" that bankers seem to think that the current once-in-a-generation boom is not "extraordinary and exceptional but rather ordinary and expected."

"Lending granted on that basis could have grave consequences for the industry's ability to weather weaker economic conditions," he said. "We have seen growing evidence of credit granted solely on the expectation that current robust conditions will continue indefinitely, with little thought as to how borrowers might perform under more stressful conditions."

"As more small savers move into mutual funds and the stock market, community banks have responded by "moving lower on the credit-quality spectrum in a reach for higher nominal yields," Greenspan scolded."

"The nation's top bank supervisor said he was "encouraged that there has not been a tidal wave of public announcements -- from large banks or small -- declaring rapid and large-scale affiliations among banking, brokerage and securities firms" in response to the passage of the Gramm-Leach-Bliley financial modernization law."

"Greenspan also said regulators need to redouble their efforts to minimize excess burdens on banks while keeping a sharp eye for fraud, lax standards and inappropriate expansion of banking services. He suggested that recent large bank failures offered broader lessons for the industry and supervisors."

Could someone please enlighten me as to what caused the FSLIC debacle back in the early 90's? I thought it was caused by real estate fluctuations, but thought that there was more to it than that...

-- Deb M. (vmcclell@columbus.rr.com), March 08, 2000.

It appears to me that banks don't seem to worried. Heck, I got 8 pre- approved credit cards in the mail the last couple of weeks. I never asked for them, so I'm assuming that I'm on a list.

It's sort of interesting that when you actually need the credit, they don't give it to you, but when you're liquid, debt-free, and have a good credit rating, they solicit you like a bunch of dudes chasing Cindy Crawford in a singles bar, LOL.

-- Tim (pixmo@pixelquest.com), March 08, 2000.

LOL! Same here, Tim.

-- lisa (lisa@work.now), March 08, 2000.