Some Banks Evil, Other Banks? Also Evil

Yesterday, we discussed that the banking industry was being portrayed as evil because they did what the government  told them to do.  You know, offering mortgages to people without sufficient income to pay it back, offering variable rates, having Freddie and Fannie offering to guarantee the bad mortgages no matter what, and so on.

Well my friends, there is another sort of bank.  There are  a few like this one, so let’s take a look at an example, shall we?

Here is a list of the sins this bank committed:

Bad or delinquent loans? Zero.

Foreclosures? None

Money set aside in 2008 for anticipated loan losses? Nothing.

Now, now dear reader, I know what you’re thinking, “This should be a good thing, amirite?”  Well, that’s not the case.  Here’s more…

Joseph A. Petrucelli is one of the most cautious bankers in America.

In fact, Petrucelli is so cautious that the Federal Deposit Insurance Corp. recently criticized his bank for not lending enough.

The FDIC’s negative review of East Bridgewater Savings Bank’s loan volume is an anomaly in today’s current banking scene as lenders reel from their role in offering too many cruddy mortgage products to borrowers with weak credit.

Still, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under the Community Reinvestment Act.

From late 2003 through mid-2008, East Bridgewater Savings averaged 28 cents in loans for every dollar in deposit. The average loan-to-deposit ratio among similar size savings banks is more than 90 percent, FDIC data show.

“There are no apparent financial or legal impediments that would limit the bank’s ability to help meet the credit needs of its assessment area,” the FDIC said in its CRA evaluation.

FDIC examiners also faulted East Bridgewater for not advertising and marketing its loan products enough. The bank, which does not have a Web site, offers fixed-rate mortgages. (Emphasis Added)

OK now, we have references to the Community “Redistribution” Act, or CRA(P).  You know, all those regulations that ORDERED banks to make bad loans?  You know, all the variable rate mortgages, all of the people getting loans that had no income?  You know, all the regulations that eliminated many of the protections in the mortgage industry?

So, we are left with this;  One group of banks are evil because they did what the government ORDERED them to do, and then here is this bank, who is evil because they didn’t do what the government told them to do.  As a result of not making bad loans, they aren’t in fiscal trouble and have no need of TARP monies.   They haven’t thrown people out of their homes and they didn’t make variable rate loans (predatory lending in libspeak).  For doing none of these things, they are just as evil as the other banks!

Here’s even more.

“We’re paranoid about credit quality,” Petrucelli said. The 62-year-old chief executive has run the bank since 1992.

The negative CRA rating, he said, caught him by surprise. The bank received “satisfactory” CRA ratings from the FDIC in 2003 and from the Massachusetts Division of Banks in early 2006.

East Bridgewater Savings ended 2008 with $135 million in assets and deposits of $84 million.

The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts.

But in the eyes of regulators, East Bridgewater Savings looks stingy. Its net loans and leases equaled 21 percent of assets. That compared with 72 percent among 385 savings banks across the country with assets between $100 million and $300 million.

“We want to make loans,” Petrucelli said. “But we also wanted to avoid the next blow up.”

He said the bank is now in position to boost lending. But he quickly added that East Bridgewater Savings won’t do anything that’s not good for the bank or its customers.

Before the mortgage boom went bust, Petrucelli said, his own employees questioned the bank’s abundance of caution. They saw other banks grow while East Bridgewater Savings sat tight.

“Other bankers wondered if we were crazy because of how cautious we are,” Petrucelli said. “They thought we could be making a lot more money.”

Well then, this truly EVIL banker insisted on keeping his institution healthy, and risks punishment from the messiah SPENDULUS MAXIMUS for doing so.  After all, he refused to make a quick buck when the market was boom, so he is good shape after the market went bust.

I guess in the Liberal Zone, if you are involved in capitalism, you’re damned if you do, and damned if you don’t.

How ya likin’ that change?

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