Bankers: Officials getting in way
Does Washington, D.C., get it?
Nope, a top executive of Mutual of Omaha bank said in Las Vegas.
A panel of bankers meeting at Mandalay Bay was asked late Wednesday whether examiners were making it difficult to make loans.
Jeffrey Schmid, chairman and chief executive officer of Mutual of Omaha, complained that examiners were creating hurdles for community banks despite the official policy of top bank regulators in Washington, D.C.
"I think there's an absolute and complete disconnect between what Washington thinks is happening and what their examiners are doing," he said.
His bank is regulated by the Office of Thrift Supervision, which Schmid expects to be merged into another federal regulatory agency.
Asked the same question about the difficulty of making loans, bankers from the Midwest and Northeast said no. Wells Fargo Bank, because of its size, has examiners that continually monitor its operations, Executive Vice President Charles Fedalen Jr. said. However, he said bank regulatory agencies are stretched and have not subjected Wells Fargo to the continual scrutiny it faced in 1991.
Schmid said regulators should close 200 or 300 banks. He also advised businesses to get loans from banks that are financially strong because otherwise they may find themselves dealing with uncooperative officials at the Federal Deposit Insurance Corp.
"The lesson here is, know your bank," he said.
Mutual of Omaha broke into the Nevada banking business in 2008, figuring it would complement the insurance company's commercial real estate lending operations.
Schmid says the strategy of his $4 billion bank has worked. However, he now thinks community banks like his should pool their deposits and get back into the car lending business and make credit card loans.
Schmid and others spoke during a panel presentation at the Mortgage Bankers Association Commercial Real Estate Finance/Multifamily Housing Convention at Mandalay Bay.
He explained how the bank bought the deposits of failed First National Bank of Nevada but the Federal Deposit Insurance Corp. retained the loan portfolio.
The bank, which operates in Nevada, Arizona and California, has five Las Vegas locations and two in Laughlin. It has $1.5 billion in commercial real estate loans.
Mutual of Omaha Bank makes construction loans and permanent real estate loans, typically in the $1 million to $25 million range. The insurance company often takes over long-term permanent financing for property.
Although the bank holds a big concentration in real estate loans, Schmid said the loans are for 20 or 30 different categories of real estate, providing diversification.
Many community banks focus on commercial real estate lending, he said, because big national banks and investment banks took over car and credit card lending. He called on community banks to pool their money to re-enter those businesses and provide more loan diversity.
Schmid also predicted that states like Nevada and Florida, which don't impose state income taxes, will become money magnets in the years ahead.
Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.
