Posts Tagged ‘Community Banks’

Bernanke Fed Has It Right: No Magic Bullet To Housing Recovery

Tuesday, January 10th, 2012

Last week, I had the opportunity to attend the New Jersey Bankers sponsored Economic Leadership Forum where William Dudley, President of the New York Federal Reserve, discussed the direction of the US Economy and housing market.  This event inspired my latest post on my page, where I discuss that there is in fact no “magic bullet” in housing, but rather its recovery lies in well thought-out actions required by banks, servicers, and policy makers, an example of which would be the creation of an HDIC. Read my full post by clicking below. I look forward to hearing your thoughts.


Why More Bank Capital Won’t Cure All The Economy’s Ills

Wednesday, December 14th, 2011

Since the advent of the economic crisis, banks have been forced to increase capital ratios. In my recent blog post on, I discuss why this may not be the solution for the banking industry, and may actually cause more harm than good. You can click here to read the post, or click on the image below. As always, I look forward to hearing your thoughts.

Have you checked your Bank Statement lately??

Monday, July 13th, 2009

While the “Too Big to Fail” Banks make the news each and every day on issues ranging from TARP to Compensation, the real story of what is happening to the consumer goes unnoticed.

Have you checked your bank statement lately? Chances are that you are experiencing some of the following:

  • Higher Fees on bank services
  • Higher Interest Rates on Credit Cards & Loans
  • Termination of Credit
  • Termination of products (such as Passbook Saving Accounts)
  • Additional Fees on existing products
  • Branch closures with inconvenient relocations
  • Relocation of your safe deposit box
  • Loss of your experienced Bank Representatives
  • Complete, intentional disruption of longtime relationships

 The same banks that disregarded their customers are now requiring that they pay for management’s poor decisions, and reckless risk taking.

 Certainly at North Jersey Community Bank, we have always put our customers first; and do not take advantage of these times, because we can… We are interested in the long term picture, in enduring client relationships, and in keeping true to our mission of being “A Better Place to Be.”

 What has your bank done?  Do you have a personal relationship with your banker? Have you invested the time to create a relationship with a bank that understands your business, knows your history, and can react to the changes occurring in your environment?

 It is important today to not take for granted your banking relationship, especially if your bank has taken you for granted…

 There are over 7000 Community Banks in this country that are ready, willing and able to put their customers first; after all, that is the only way they know how to do it…

We live in a Parallel Universe…

Monday, May 11th, 2009

The Stress Tests are over, and now it is time to get back to business…

For the “Too Big to Fail”, the world has been a place where excessive risk taking mistakes are rewarded, or at least not punished, where regulators only suggest, and where the rules are changed so no one gets hurt.

As we move past the recently released Stress Tests, let’s understand that although the world has sighed a breath of relief that the system is not going to fail, we must insist that this uncompetitive, government supported network of “Too Big to Fail” institutions must somehow be made accountable for their actions, pay a price for the intervention, and be forced to conform to a system where the rules apply to all.

There are many changes that need to occur in this post – Stress Test world… Certainly a tiered FDIC fee structure, and a tiered capital structure based on the risk taking of an institution, a closer look at the separation between banks and commercial entities, more responsibility for all phases of mortgage products, and the ability for the FDIC to regulate all institutions regardless of size.

It is also important to understand that it is the Community Banks, who operate every day by working within the framework of the regulators that regulate them, have understood that prudent risk taking is rewarded, and excessive risk taking is punished, have not been treated fairly in these strained times. 

Community Banks have not needed a dollar of taxpayer money, have maintained proper capital ratios, and have continued to lend throughout this crises. In fact, they are the only group in the banking sector that has increased lending, and have been there to protect the “little guy” on Main Street.

Any relief given to Community Banks will certainly find its way to the communities in which they serve, and not into the excessive pay packages that have been all too common at the “Too Big to Fail.”

There are a number of regulatory and accounting improvements that could be made to support the Community Banking system. These include, Tiered Regulation, Gov’t Assisted Insurance Program for classified assets, SBA enhancements, and differentiating the Community Banks when regulators perform their examinations.

Let’s not allow those with the enormous lobbying efforts to dictate the framework of this new environment…

We need to be heard…

Too Big To Regulate???

Sunday, April 26th, 2009

Interesting how convoluted and frustrating the release of the Stress Test results has become… So now supposedly, the “Too big to fail or manage” have received word on whether or not they have sufficient capital, in other words, are solvent.  It appears that by some miracle, we are all supposed to feel better about the system.  The reality is that this dance was designed to obfuscate the fact that these banks have gotten larger than any of our regulators can understand or resolve. The regulatory process has been unable to keep pace with the growth of these institutions, and have in fact allowed for the creation of institutions that pose a risk to our capitalist system and to our financial health. The FDIC simply does not have the ability to oversee, and regulate these multi-directional behemoths that no longer resemble traditional banks. There is much talk today of a super regulator to fill in the void… It is my opinion that this would be a colossal mistake, and would pit the unwieldy, super powerful, giants against the rest of the more traditional banks that have for the most part, played by the rules.

It is these traditional banks, the local community banks like ours, and many others across the nation that continue to play a significant role in the support of the vast majority of businesses today. In fact, the only increase in lending is occurring at the community bank level. While there is certainly a place for national bank players, they must adhere to the same regulatory process as it relates to risk, and if they are going to be afforded FDIC insurance coverage, must be forced to pay higher premiums as they elevate their risk profile. In turn, no bank should be allowed to grow larger than the FDIC’s ability to determine insolvency, and the ability to prosecute an orderly wind down of a failed institution. That is all but impossible today…

There are only 19 banks today with assets over $100 Billion… Almost 100% of the problems we are facing reside at those banks… For them, the Stress Tests so far have proven that it is acceptable to take outsize risk, become “too big to fail”, and then win whether your risk pays off, or seek government intervention if you failed.

On May 4th, let’s be done with the stress tests, and begin to look for a permanent solution that will benefit not only the visible 2% of banks in this country, but instead will support the transparent, vitally important 98% who are being penalized from this crisis…

Have you been TARPed yet???

Sunday, April 5th, 2009

TARP (Troubled Asset Relief Program) was originally meant to support those banks deemed to have capital issues, so that a catastrophic failure of our financial system could be avoided, or to get healthy banks to lend at a faster clip to stimulate the economy. How anyone could not have known, or predicted that TARP’s passage would actually endanger our capitalist system, and pose what may be the greatest threat that entrepreneurs and Main Street businesses have ever faced, is hard to understand… Do you remember the quote “we’re from government, and we’re here to help.”

Let’s take a quick look at how TARP has morphed…

  • Banks deemed “Too Big To Fail” are forced to accept TARP funds whether they want the capital or not…
  • Due to populist outrage over the AIG bonus debacle, all TARP recipients must follow new government guidelines on compensation and bonuses.
  • The President forces out the CEO of General Motors and orders the company to start building smaller and more energy efficient cars, as a condition of receiving additional TARP funds.
  • Chrysler is being forced into a merger with FIAT, and now the banks that hold its loans, who are TARP participants are being pressured into converting their debt to equity.
  • And now, TARP is being used to support the new Public Private Investment Partnership (PPIP) which although may be needed in concept, will serve to only reward the very largest investment companies, and in some cases the very same people that got us into this mess. Main street investors need not apply. Only a select few Investment managers will be allowed to invest with the Treasury to make outsized profits, and the FDIC will guarantee any losses…
  • Banks that have accepted TARP are now scurrying to figure out how to repay… One needs to question the decision making process that went on at any of these banks. The Boards and Managements Teams need to be questioned and in some cases may need to be replaced. As a shareholder, I would be outraged that management recommended, and the board approved, a contract wherein the other side retained the right to make changes at any time… It is clearly a breach of the fiduciary responsibility that is expected and required of those positions.

 Main Street businesses, investors, or individuals get to pay the price with higher taxes, higher FDIC assessments (which they will pay as a pass-thru from their banks) and more regulations. The program does not do anything to help those that have a troubled loan, a troubled mortgage, or face the downdraft in the economy created by the irresponsibility of the “Too Big to Fail.”

 No one wants TARP because of what it represents; the darkest side of our government reaching into, and trying to run our businesses. That is not what made America great..

 What we need today are programs that are designed to help those that have acted responsibly, and have been the engine of growth for this country; the local main street businesses, and community banks. Incent the entrepreneurs with tax credits for hiring, buying new equipment, and for making new investments in factories, offices and stores. Grant tax and regulatory relief for those that have proven to ability to “get it done,” and return to a system where calculated risk taking is rewarded, and reckless activity punished…That, is what has made America great.