FDIC Penalizes Massachusetts Bank for being too careful on who loans are given to

Does anyone not understand the type of pressure that the federal government put on banks to make bad loans? Fox News has the story here:

A Massachusetts bank that has defied the odds and remained free of bad loans amid the economic crisis is now being criticized by the Federal Deposit Insurance Corp. for the cautious business practices that caused its rare success.

The secret behind East Bridgewater Savings Bank's accomplishments is the careful approach of 62-year-old chief executive Joseph Petrucelli.

"We’re paranoid about credit quality," he told the Boston Business Journal.

That paranoia has allowed East Bridgewater Savings Bank to stand out among a flurry a failing banks, with no delinquent loans or foreclosures on its books, the Journal reported. East Bridgewater Savings didn’t even need to set aside in money in 2008 for anticipated loan losses.

But rather than reward Petrucelli's tactics, the FDIC recently criticized his bank for not lending enough, slapping it with a "needs to improve" rating under the Community Reinvestment Act, the Journal reported. . . . .

Thanks very much to Tony Troglio for this link.

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Blogger Chas said...

Markie Marxist sez: "Prudent capitalists? We can't have that! They might give capitalism a good name! Besides, it thwarts our strategy of wrecking capitalism by forcing capitalists to be reckless."

3/18/2009 1:41 PM  
Blogger Raven Lunatic said...

...so, because they've been doing something the rest of the banks should have been doing the entire time, they're being penalized?

Ah, I love our government.

3/18/2009 4:44 PM  

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