Straight Talk — Congress: Break the cycle

      With the fall session of Congress well underway, community banks are caught in a very dangerous cycle; careful congressional actions are necessary to alleviate the situation.

      Examiners are increasingly requiring bankers to set aside ample earnings for projected future losses. Some bankers even tell horror stories about being required to set aside reserves for loans that are still performing. As a bank sets aside more for reserves, it reduces its earnings. As earnings decline, so do the bank’s capital ratios. Diminishing capital ratios . . .