Thursday, November 5, 2009

Regulators pressured to go easier on local banks, deals at local country clubs and CSUB moves to Division I

 *.... SOFTER REGULATIONS FOR BANKS: It's too late for San Joaquin Bank, but there's finally a serious move in Congress to back off the pressure that has led to the closure of 115 community banks. One interesting aspect of this new softer attitude allows banks to keep loans on their books as performing even if the value of the affected properties have fallen below the loan amount. That's the word verbatim from The Wall Street Journal (read the entire story here), which says the new guidelines were released Friday, October 30, exactly two weeks after San Joaquin Bank was shut down. This is a stunning development because this was one of the primary issues that led to San Joaquin's downfall, and one has to wonder if the bank would have survived had these new rules been in place. All that is now water under the bridge, of course, but it has left San Joaquin directors and shareholders shaking their heads and wondering how different things might have been. And it comes at a time when folks like Rep. Barney Frank, D-Mass., and others are waking up to the fact that so many local banks are going under while the "too big to fail" banks like Bank of America and Wells Fargo are thriving after receiving billions in tax dollars for doing exactly the same thing. A couple of important quotes from the Journal story:

 "The new guidelines are targeted primarily at the hundreds of billions of dollars worth of loans that are coming due that can't be refinanced largely because the value of the properties have fallen below the loan amount. In many of these situations, the properties are still generating enough income to pay debt service.
 "Banks have generally been keeping a lid on commercial real-estate losses by extending these mortgages upon maturity. However, that practice, billed by many industry observers as "extending and pretending," has come under criticism by some analysts and investors as it promises to put off the pains into the future. Now federal regulators are essentially sanctioning the practice as long as banks restructure loans prudently. The federal guidelines note that banks that conduct "prudent" loan workouts after looking at the borrower's financial condition "will not be subject to criticism (by regulators) for engaging in these efforts.

 Every day there is a new development in this story as politicians continue to put pressure on the regulators to go easier on local banks. Read the latest installment of this saga here.

* ... GOOD NEWS OR JUST A BLIP? All the news about the recession being technically over doesn't mean much if it is not accompanied by more folks finding meaningful work. Nationally the unemployment rate is nearing 10 percent, and in Kern County it is around 15 percent, though experts will tell you those figures greatly underestimate the number of people out of work. (Delano's unemployment rate is well north of 30 percent) So when I hear any good news on the job front, I take note. Riley Parker, a local private investigator, told me one early indicator of a recovery might come in pre-employment screenings, which his wife Jane handles under the company name Pre-Employment Profiles. (check their website here) Parker told me they are in the middle of the third straight week of 20 percent increases in the raw numbers of pre-employment screenings. Good news? Let's hope so.

 * ... BARGAINS AT THE CLUB: Another sign of the economic times are the deals that local country clubs are offering to lure new members. I've already reported that Seven Oaks Country Club is now selling full equity memberships for $10,000, down from the normal $30,000. Now Bakersfield Country Club is offering virtually "free" memberships to lure members from other clubs. The catch: you have to be a member of another club for the initiation fee to be waived, you have to be sponsored by a BCC club member and of course you have to agree to pick up the monthly dues and food minimums. That's the word from Sheryl Barbich, the longtime civic activist and strategic planner who serves as BCC's membership chair. Barbich also said there is also a $1,500 program for folks who aren't members of other clubs. She said these deals will last until a certain number of new members are signed.

 * ... CSUB BASKETBALL MOVES TO BIG TIME: I had the pleasure of hearing Cal State men's basketball coach Keith Brown at my downtown Rotary on Thursday. CSUB's move to Division One status means big time opponents and national TV exposure this year. Among the schools we'll play are Santa Clara, Boise State, University of Cincinnati, Utah State, Gonzaga and UCLA down at Pauley Pavilion.

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