Further Regulatory Focus Changes

October 22, 2008

Authored by: Robert Klingler

We have heard from several federal and state banking regulators that the factors that may be determinative in a bank’s application for TARP Capital are continuing to change.  We understand that federal regulators now want a “with” and “without” projection for each application, and want larger banks to indicate a willingness to buy failed and failing banks (to this end we’ve been told of large client that was given a physical list of potential banks to be bought).

One of our clients has a residual Fair Lending issue, but was told that since they have a Satisfactory CRA rating, the Fair Lending issue would not prevent the bank from receiving TARP Capital.  That client was also told that the projections should show a CRE concentration of less than 300%. Finally, the client was told to file its Application as a “Confidential Draft” to avoid public scrutiny.