Feds Helping or Hurting Us?

The FDIC has set up a toll-free hotline that will let small business owners ask agency officials about credit availability and raise concerns.   The FDIC will respond to hotline inquiries about policies and the banks that the agency regulates.  The hotline is available M-F from 8 am to 8 pm EST.  Dial 1-855-FDIC-BIZ (1-855-334-2249) to talk to an official.

I can’t help but wonder how those conversations will go.  What value will this hotline really provide?  What can a business owner ask and an agency official answer that the business owner would not already know?  Ironically, this past Thursday, House Financial Services Chairman Spencer Bachus (R-Ala) said that bank examiners must stop being overly restrictive in evaluating credit decisions and allow community banks to make the small business loans needed to fuel the economic recovery (at an FDIC small business lending forum).  “We all know that inadequate underwriting and loose credit standards contributed to the financial crisis, but the pendulum has swung too far toward regulatory management,” Bachus said.  “We can’t allow arbitrarily applied regulatory directives to stifle prudent lending.”

Bachus suggested that instead of focusing on patterns or practices that suggest poor underwriting or lax risk management, some examiners are micromanaging community banks’ daily activities.  I agree wholeheartedly with the assessment of Chairman Bachus.  My basic question is:  Are the regulators helping us or hurting us?  Maybe it’s simultaneously both.  Crazy, right?


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