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Illinois Community Banker: We Need a More Balanced Regulatory Environment That Promotes Lending

Washington, D.C. (May 17, 2010)—Greg Ohlendorf, president and CEO of First Community Bank and Trust, Beecher, Ill., on behalf of the Independent Community Bankers of America (ICBA), today said that our country needs to return to a more balanced regulatory environment that promotes lending, economic recovery and bank safety and soundness.

“Community banks support commercial lending and local economic activity not supported by Wall Street,” Ohlendorf said during a field hearing before the House Financial Services Subcommittee on Oversight and Investigations in Chicago, Ill. “Even during these challenging times, our nation’s nearly 8,000 community banks remain committed to serving their local small business and commercial real estate customers. However, the banking agencies have moved the regulatory pendulum too far in the direction of overregulation at the expense of lending. We need a balanced regulatory environment that promotes lending, economic recovery and bank safety and soundness.”

The Illinois community banker said that his bank and other community banks all over the country are facing challenges that can hinder their ability to make small business and commercial real estate loans, including lack of loan demand from qualified borrowers. “Many of our best small business and commercial real estate customers cite their uncertainly about recovery as their key reason for not seeking additional credit,” he said.

Ohlendorf offered various solutions, including a proposal to amortize loan losses over 10 years for regulatory capital purposes. He said that this proposal was successfully used during the agricultural crisis in the 1980s and is a reasonable lifeline for banks suffering from commercial-real-estate loan losses. He also said that he supports the administration’s proposed $30 billion Small Business Lending Fund. “A properly designed program will encourage additional small-business lending, fuel job creation and help create economic stability,” he said.

Finally, Ohlendorf said ICBA recommends including the entire amount of the loan and lease allowance as part of a bank’s risk-based capital. He said this would help 45 percent of Illinois banks.

To view Ohlendorf’s full testimony, visit www.icba.org.

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