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FDIC Federal Register Citations
From: Alma Shuckhart [mailto:ashuckhart@tibbank.com]
Sent: Thursday, March 09, 2006 3:47 PM
To: Comments
Subject: Propsed Guidance for Commercial Real Estate Lending
Alma Shuckhart
599 9th Street North
Naples, FL 34102-5623
March 9, 2006
Robert E. Feldman
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
Dear Robert Feldman:
As Chief Credit Officer of a $1Billion Community Bank, I'm writing because
I think it important to comment on the Guidance being proposed with
respect to commercial real estate lending. Commercial real estate lending
is an extremely important part of the economy in Florida and like wise it
is extremely important part of bank lending.
I understand the need for sound lending and sound loan portfolios. I have
concerns, however, that the Guidance as announced will have a negative
overall effect on my institution and the economy as a whole.
My concerns are not so much with the individual practices set out in the
Guidance, but rather with the way the Guidance is imposed. We have had
experience in which examiners impose even existing regulations differently
than they previously had done. The proposed Guidance contains certain
thresholds and a laundry list of practices and requirements. I am
concerned that the rules of the game have suddenly changed.
Specifically there are several points we would like for the Guidance to
make clear. First, that in looking at concentrations there will not be a
one size fits all response. Each of our institutions has a different
history, different controls, different portfolios, and different markets.
When those in the field determine there is a concentration any response
needs to be tailored for the specific circumstances.
Second, we hope the Guidance will make it very clear that if the
concentration thresholds are exceeded it does not automatically require a
capital increase. Any increase should be in the context of the
circumstances of the particular institution.
Third, the Guidance should expressly indicate that its purpose is not to
discourage commercial real estate lending.
If the Guidance is imposed in a mechanical or arbitrary manner or if it is
intended to effect a policy shift discouraging commercial real estate
lending then I fear grave consequences. Secured real estate lending has
been the bread and butter of banks in Florida. If such loans are not
available then will we have to look to other types of credits which
historically have been more risky?
Perhaps most important, if the message is perceived to be that commercial
real estate lending has great regulatory risk, then such loans will
significantly diminish. This will lead to a downturn in our economy that
will create systemic problems for banks far beyond the risk of commercial
real estate loans.
Commercial banks currently operate in a highly regulated environment with
strong lending policies and procedures in order to maintain strong credit
quality. Each bank is reviewed annually by regulatory agencies and are
graded accordingly. Highly rated banks with strong credit quality should
not be required to increase its capital levels simply because it has a
high concentration of CRE loans.
I thank you for your consideration of these concerns and comments and hope
that the final Guidance will address them in a meaningful way
Sincerely,
Alma Shuckhart
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