FDIC Punishes Success

Considering the times we find ourselves in and the present occupant of the White House, why doesn't his surprise me in the least?

Boston area bank in trouble with FDIC for being “too successful.”

East Bridgewater Savings Bank has stood out from the current swirl of chaos in the banking industry. While other banks have been failing, this bank, with $135 million in assets, has not a single delinquent loan or foreclosure on its books. It is not just breaking even, it is making profits.

The bank's secret to success? The Boston Business Journal reports that it has only made loans to credit worthy borrowers. Shocking strategy, right?

So how have government regulators responded? They penalized the bank with a "need to improve" rating under the Community Reinvestment Act. Out of five possible scores, that is the second worst rating. "There are no apparent financial or legal impediments that would limit the bank's ability to help meet the credit needs of its assessment area," the FDIC claimed in evaluating the bank.

How stupid is that?

A bank shows fiscal restraint, being careful to give out loans to people and businesses that can actually pay them back, and they get slammed by the federal government for taking care of their depositor's money. Isn't that what a bank is supposed to do?

If it hadn't been for the Community Reinvestment Act, a lot of other banks would be as healthy as East Bridgewater Savings Bank.

Checking on a few of the banks local to us here at Weekend Pundit, it appears they may be next on the FDIC's hit list. While they aren't entirely without defaulted loans or foreclosures, their rates of such problems are very low. They have excellent liquidity and are still lending, though maybe not as much as the Feds might want. But then they're also pretty conservative with their depositor's money, just as they should be. Are they next in line for punishment by the FDIC?

Just remember, folks: These are your tax dollars at work!

(H/T Maggie's Farm)