Some advice from your friendly neighborhood bank regulator

By Geert De Lombaerde Posted on October 16, 2009 at 7:23 am

Sheila Bair and her team are ready to help banks tackle the looming CRE crunch.

Prudent loan workouts are often in the best interest of financial institutions and borrowers, particularly during difficult economic circumstances and constrained credit availability. This guidance reflects that reality, and supports prudent and pragmatic credit and business decision-making within the framework of financial accuracy, transparency, and timely loss recognition.

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Tags: banking, commercial real estate, Federal Deposit Insurance Corp., financial regulation, loan losses, Sheila Bair  

Bair pushes for ‘comprehensive resolution regime’

By Geert De Lombaerde Posted on July 23, 2009 at 7:44 am

Bloomberg News says FDIC Chairman Sheila Bair will today tell lawmakers they should collect cash from the country’s large banks for a fund that would manage the bailouts of failed financial companies. Oh yeah, and throw the bums out.

“In contrast to the current situation, this new regime would not focus on propping up the current firm and its management,” Bair said. “Without a new comprehensive resolution regime, we will be forced to repeat the costly, ad hoc responses of the last year.”

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Tags: bailout, bank failures, banking, Federal Deposit Insurance Corp., financial institutions, financial regulation, government intervention, Sheila Bair  

FDIC chief: We’re investigating thousands of mortgage fraudsters

By Geert De Lombaerde Posted on March 3, 2009 at 9:30 pm

Sheila Bair tells the National Association of Attorneys General that her agency is going all out to take to task the bad guys in the financial system…

Our Professional Liability Group, which handles claims in connection with failed banks, is also gearing up for a surge in civil cases against mortgage brokers and other third parties that defrauded lenders. To date we’re pursuing well over a hundred home mortgage fraud cases, and investigating some 4,000 more.

…and says the much-maligned concept of loan modifications does work – if done right.

Far too many “mods” reported in the press were nothing but recapitalization of past due principal and interest and other short term “fixes” that frequently raised payments instead of lowering them.

These “modifications” have not performed well, creating the impression that all loan mods are doomed to failure. The jury is still out on redefault rates and to be sure, a worsening economy will mean even more mortgages will become delinquent. But studies to date have suggested much higher success rates when the modification results in a meaningful payment reduction to an affordable level.

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Tags: Federal Deposit Insurance Corp., financial regulation, fraud, governmental investigations, mortgages, National Association of Attorneys General, Sheila Bair