year we had quite a few. So, we think
we’re making progress there. We did
deliver a version of the training this
year online before the Shared National
Nearly two-thirds of CFA’s members
are independent entrepreneurial
commercial finance companies. During the height of the credit crisis,
more than 40% of those companies
indicated they had seen their bank
lines of credit reduced or terminated.
There is a perception among many
of these companies that banks were
pressured by regulators to limit lending to commercial finance companies.
Is there any truth to this?
No, there is really no truth to that
perception. The OCC didn’t have any
particular emphasis on the commercial finance companies. Our examiners assess the safety and soundness of
bank lending operations, and concentrations of credit, but they do not
dictate individual credit decisions or
selections of customer types.
What did happen, though, I think
probably is well known, but, because
of the financial crisis, bank managements and our examiners did reassess
risk tolerance. That’s a rational reaction given that many banks were experiencing substantial loan losses, which
also, in some cases, severely impacted
the earnings and strained capital.
So, the bankers were more cautious
and selective in their risk taking, and
in some cases their actual capacity, even if they wanted to lend, was
impacted because of the strain on
capital. But, again, that was a general
credit environment phenomenon. It
Are there unique challenges that
examiners face when trying to ac-
curately assess asset-based credit
facilities that they don’t encounter
with commercial loans?
What role can an industry association like the CFA play in helping to
increase regulators’ understanding
of how ABL works and where it fits
within a bank’s portfolio?
We already maintain a dialogue with
the CFA and I’m actually scheduled to
be on a panel at the Advocacy Conference in September. Of course, we
often work directly with the commercial bank members as part of our
normal supervision. But, as the CFA
has done in the past, it is useful to
hear issues and concerns that your
CFA members are perceiving, and we
do look into those concerns and make
adjustments if we feel it’s appropriate.
We are not always going to agree, but
the dialogue is really useful to us. So,
I think the CFA should just continue to
do what they are already doing. TSL
Michele Ocejo is executive editor of The