An article in the Wall Street Journal outlined a proposed bill in the House to reduce the capital rate before the FDIC deems a bank as "troubled." The stringent capital requirements demanded by the FDIC are unrealistic in the current economy, and it hurts the chances of a viable community bank surviving the regulators' wrath. From the article:
Rep. Bill Posey, Republican of Florida and the author of the bill, raised concerns that regulators are hurting the economic recovery by currently requiring banks to consider loans technically non-performing, when parents or others make payments on them while the borrower is between jobs, even though not a single payment was late or missed.
“Such subjective over-regulation makes banks less inclined to lend for job creation and results in more foreclosures, greater layoffs and longer unemployment lines,” said Posey. “The traditional definition of a performing loan is exactly that: a loan which a borrower is currently repaying on the agreed terms. Period."
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