From: Mark Sorfonden - MBI [mailto:MSorfonden@msbna.com]
Sent: Monday, March 28, 2005 4:36 PM
To: Comments
Cc: Caudle, Rick; Larry Petersen - MBI
Subject: Interagency Proposal on the Classification of Commercial Credit Exposures
Why should we all spend time and money (rewriting policies; interpreting, training, etc.) for a new system when the net results should be the same? If the current system (classification policies as well as call report instructions) isn't broken, don't fix it. Rewording the old system will not result in weak bankers all of sudden deciding to to properly recognize their adverse loans and associated risk of loss. Rather, enforcement of the current system is key to reaching those desired results.
Our time and money could be better spent on higher risk areas of the industry. For example, many bankers are ignoring best practices to meet shareholders' increasing profitability and growth demands while competition for borrowers and depositors has increased to the point of stupidity in the areas of underwriting and pricing and risk-taking. At the same time, field examiners are spending less time in this area.....great for good bankers, but bad for weak bankers that were either poorly trained or have chosen to ignore sound practices for a variety of reasons (stubborn, job hopper, near retirement, etc.).
As a current banker and former field examiner and capital markets specialist for the FDIC, the changing focus of the regulatory agencies scares me as much as bankers making the same mistakes made in the 1980s.
Mark T. Sorfonden
Executive Vice President & Chief Credit Officer
Midstates Bank, N.A.
Harlan, Iowa 51537