Testimony focuses on federal reforms, condition of state banks

FOR IMMEDIATE RELEASE 
December 1, 2009 
Contact: Jason Moon 517-335-1700
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LANSING - Office of Financial and Insurance Regulation (OFIR) Commissioner Ken Ross testified yesterday afternoon at a field hearing before the House Financial Services Subcommittee on Oversight and Investigations at Lawrence Technological University in Southfield. The hearing was titled “Improving Responsible Lending to Small Businesses” and was organized by Congressman Gary Peters (D-Bloomfield Twp) and included Michigan Congressmen John Dingell (D-Dearborn) and Mark Schauer (D-Battle Creek) and subcommittee chair Dennis Moore (D-KS). The commissioner’s testimony focused on the condition of the 118 state-chartered federally-insured commercial and savings banks OFIR regulates and what reforms the federal government should consider in order to improve the banking industry in Michigan. In addition to Commissioner Ross’s testimony, the congressmen also heard from members of Michigan’s business and banking industries, as well as federal banking regulators.

Below is an excerpt of Ross’s testimony:

Michigan banks have been able to weather the economic malaise and over time they might have been able to work their way through the challenges associated with the historic job losses in the auto industry, but some will not be able to weather the additional stress associated with the huge devaluation of real property seen across the state.  

The current crisis was in many ways fueled by various arms of the nation’s largest commercial and investment banks, a number of which were saved by aggressive capital bolstering at the federal level.  For systemically important big banks, the rules have been bent and broken, but community banks have been given little flexibility and are paying the price for the economic problems created by their larger counterparts.

In my view, it is unreasonable to force community bankers, who weren't, by and large, in subprime lending and who weren't reaping fortunes from the national securitization machine, to pay the ultimate price for those who benefited from the fundamental underlying causes of the financial crisis.

To read the Commissioner’s entire written testimony, visit: http://www.house.gov/apps/list/hearing/financialsvcs_dem/ross_testimony_final.pdf

For more information on the hearing, visit: http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_112309.shtml

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