Clkub 20: Banks are lending, says head of state association

Rather than being part of the nation’s lending crisis, banks are part of the solution, the president of the Colorado Bankers Association says.

“Contrary to widespread public perception, banks actually are lending,” Don Childears told Club 20 attendees Saturday morning.

In fact, banks chartered in Colorado loaned 11.7 percent more money last year than they did in 2007, Childears said. The lending drop-off has occurred with nonbanks, not banks, and it’s important to distinguish between them.

“In our society we use the word ‘bank’ to refer to all sorts of nonbanking identities,” he said.

Banks have insured deposits, face heavy regulations and rarely are leveraged at even 12 times their capital, whereas brokerage houses routinely are leveraged at 30, 35 or even 50 times capital, Childears said. Congress should look at limiting those kinds of leverage rates, he said.

Childears said banks are teased about being conservative about lending and down-payment requirements.

“That kind of lending is what has kept us safe and solid,” Childears said.

As an example of that, he said banks and their affiliates are responsible for 58 percent of residential mortgage lending in the state, but only 18 percent of foreclosures.

Less than 5 percent of banks have had the government buy stock in them, and all but two of those are healthy, Childears said. The perception was that this spending was a bailout.

“This money was intended to stimulate lending, to get more money out into the general economy,” he said.


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