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Sent: Thursday, May 05, 2005 4:56 PM
Subject: Interagency Proposal on the Classification of Commercial Credit Exposures
I was a state bank examiner nine years and have been in loan review for
banks for 20 years.
The current rating system of Special Mention, Substandard, Doubtful and
Loss has worked well for many generations, and bankers pretty well know how
a given loan should be classified and have grown accustomed to how examiners
With respect to facility rating, if we have a loan with loss, we
actually charge off our best estimate of the loss.
This proposal is a step backwards and will waste the time of bankers.
I would also like to point out that the proposed system of classification
applies only to commercial credits. A separate classification system for
consumer credits would still be governed by the Uniform Retail Credit
Classification and Account Management Policy Statement from June of 2000.
Therefore, in classifying our credits and preparing our watch list, we will
have one set of rules for commercial loans and another set of rules for
We can certainly handle whatever final rules come out, but I believe this
proposal did not adequately consider the training burden it would place on
small community banks. This system may be fine for a $100 billion bank, but
for most banks regulated by the FDIC I believe the current system is working
well. s/ Thomas K. Buxton
|Last Updated 05/25/2005||Regs@fdic.gov|