Tucson Real Estate News

In a June 5 Senate hearing about "The State of The Banking Industry," John Dugan, Comptroller of the Currency, announced that bank examiners will require management to obtain new appraisals due to market or project changes when needed, and take action when appraisals show that current value no longer supports a loan.  

In the hearing before the Senate  Banking, Housing and Urban Affairs Committee, Dugan allowed that in many cases an adjustment to reflect current market conditions, rather than a full appraisal could be sufficient, and that examiners should allow banks ample time to have appraisals completed and corrections made.

Reflecting upon the 1980s, Dugan reminded the committee that  "In too many instances, because bankers were reluctant to adjust appraisals to reflect current market conditions, examiners were forced to unilaterally make such adjustments." 

Other speakers at the hearing were: Sheila Bair, chair, Federal Deposit Insurance Corporation; John Reich, director, Office of Thrift Supervision; JoAnn Johnson, chair, National Credit Union Administration; and Donald Kohn, vice chair, Board of Governors, Federal Reserve System.

It will be interesting to see how this is implemented and whether it goes smoothly or becomes a battle of "tug & shove" between the banking industry and regulators.  The reaction, not the rule itself, will be an indicator of how this will affect the general public.  Will the industry take the medicine and move along to do business, or will it resist...to the detriment of us all?

          Kent Simpson