Federal Deposit
Insurance Corporation

From: J. Russell Greene [mailto:rgreene@gbof.com] 
Sent: Monday, March 20, 2006 2:51 PM
To: Comments
Subject: Propsed Guidance for Commercial Real Estate Lending

J. Russell Greene
2055 Palm Beach Lakes Blvd
West Palm Beach, FL 33409-6501


March 20, 2006

Robert E. Feldman
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429


Dear Robert Feldman:

I am president and chief executive officer of Grand Bank & Trust of 
Florida, West Palm Beach, Florida, a $390 million community bank.  Because 
we are located in one of the fastest growing areas in the United States, 
development and construction of homes and commercial properites has 
skyrocketed to meet the needs of the rapidly increasing population.  
Commercial real estate lending is a significant activity for us as it for 
the majorityof Florida financial institutions.  Our preliminary review of 
the proposed Guidance indicates that we are only moderately above the 
thresholds.  We are confident that the underwriting practices in place at 
our institution go a long way in mitigating the risks of commercial real 
estate lending. It is our opinion that most institutions operate similarly 
having learned the lessons of past economic cycles.

I understand the need for sound lending and sound loan portfolios.  I have 
concerns, however, that the Guidance as proposed 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.  And there should be a 
sufficient allowance of time for the institution to reduce its level of 
such loans in lieu of additional capitial if that is the course it elects.
 
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.
 
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,


J. Russell Greene