February 8, 2013
Bob Coleman: We’re talking with Jon Winick of Clark St. Capital, a bank consulting and loan sale advisor firm. He is also the editor of The Banner Report. Jon, tell us what is going on in the news affecting Small Business lending these days.
Jon Winick: Thanks Bob. We’ve have some interesting things that are going on in banking. For one thing, the Financial Accounting Standards Board, which is basically the rule making body for accountants, has proposed a new rule that will fundamentally change how banks reserve for loan losses. Basically, the new model is going to be more forward thinking, and banks are going to have to project up to potentially the life of loan what the expected losses they expect on a portfolio.
Bob: A good thing for the industry or should we be concerned?
Jon: It could restrict lending as banks would, theoretically, have to take a reserve at day one of origination and project losses for the life of the loan. It could cause banks to be less willing to do long-term loans and will make the SBA structure more favorable in comparison. The other thing that’s interesting is the General Accounting Office has released its report on bank failures; they looked at bank failures from 2008 to 2011 in ten affected states. We have an interview with Lawrence Evans this Tuesday, which is tomorrow, on his thoughts on what caused bank failures based on their stuff.
Bob: Interesting. I want to go back to the accounting rules. When will those take affect?
Jon: Good question. Well naturally there’s a tremendous amount of bellyaching from the industry; the ABA has come out against it. Right now it’s a proposed rule; they’re taking comments for the next 90 days. They may change their mind, they may hold their ground, and then it would be implemented.
Bob: Interesting, interesting. Thank you very much, Jon Winick, Clark St. Capital out of Chicago; thank you for joining us.
Jon: You’re welcome Bob, always great.