Regulators Require Small Banks to Increase Capital…

…while at the same time increasing new loans. A new article from the Journal details an interesting story about smaller banks which invested in mortgage backed securities as hedge funds were dumping them in 2007 and 2008.

“They want to force you to take your medicine all at once, and, at the same time, they want you to go out and make a bunch of new loans,” says Thomas Page, president of Emprise Bank in Wichita, with $1.3 billion in assets. “You can’t have it both ways.”

Meanwhile, FASB has argued that regulators should allow banks some flexibility in reporting their assets using mark-to-market accounting rules.

It will be interesting to see how this unfolds.

Regulators Require Small Banks to Increase Capital

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