You just never know who you'll run into here in blogland.
Joe Peek is a professor of finance at the University of Kentucky (where I am a very poor excuse for a graduate student). He has a guest post over at The Hearing.
Dr. Peek's professional obsession is the Japanese banking system. He takes an unreconstructed view of the parallels between our response to the banking crisis and Japan's, and is particularly unhappy with the recent softening of mark-to-market rules. Here's a snippet:
Much like in Japan, U.S. policy makers have made efforts to avoid distinguishing among banks, for example, forcing all of the largest banks to accept billions of dollars of Troubled Assets Relief Program funds. The stress tests for the 19 largest banks provide policy makers with an opportunity for a "do over." The results of the stress tests must be based on market values and whether the banks are truly economically viable. Government capital should not be injected into banks indiscriminately; only the strong should survive. We need disclosure, as well as closure, if a bank either is not viable or cannot raise sufficient private-sector capital to become viable.
The time has come for transparency to replace the "parency" of government support of non-viable firms, financial or non-financial. The "convoy system" did not work in Japan during their "Lost Decade," and should not be expected to work here.
| Steve Randy Waldman — Tuesday April 28, 2009 at 4:39pm | permalink |
METROPOLITAN Bank &Trust Co. said loan growth would weaken this year amid the global economic downturn.
On the sidelines of the lender's stockholders' meeting, Jette Gamboa, Metrobank head of investor relations, said the growth of the bank's lending business would slow to between 5 percent and 8 percent this year from 17 percent last year.
“The global crisis is not yet over. We don't know what is going to happen. This is not the time to take in more risk. We will have a tempered approach to credit,” Gamboa said.
The company expects consumer lending to grow by double digits but sees a more modest corporate lending business this year.
If the situation worsens, Gamboa said that it is likely that credit defaults would ensue and asset quality would deteriorate. “[But], what we would like to emphasize is we have built our systems over the last five years centered on credit excellence and risk management,” she added.
The official said the bank's bad loan ratio however would go down to 4 percent this year from 4.5 percent last year.