According to this FinCriAdvisor article, there are two primary concerns that will impact every bank’s examinations in 2010: asset quality and liquidity. Your bank’s New Year’s resolutions will need to include steps to ensure your examiners are assuaged on both counts.
- Resolve to have credit. One FDIC examiner stated the most common reason for enforcement orders with stringent progress report requirements is credit issues. Asset values are being challenged by examiners as a result of the real estate impact on the market. The examiner’s suggestion to satisfy regulators? Take a look at your bank’s reserves, then add to them.
- Resolve to be liquid. Bank deposits are a cause for concern for regulators. If the stock market continues to recover, customers may want to pay down debt or invest in the market again, instead of making cash deposits. This may cause problems for banks to retain their deposit funding. The examiner’s suggestion to satisfy regulators? Make sure you have access to sufficient amounts of liquidity, and don’t rely on deposits.
The FDIC has reported it will be growing its risk management staff by about 31% and its total examination staff by 25%. For more information, please contact Mary Zambreno at 515-246-4512 or mzambreno@dickinsonlaw.com.
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