Perdue signs banking bill

In the first bill this session to get Gov. Sonny Perdue’s signature, HB 926 became law and will help locally chartered banks.

The bill, which passed the Senate Thursday afternoon by a 52-0 vote and was signed by Perdue at 3:30 p.m., will allow law banks to be able to renew loans with existing customers even if financial strain has made that loan above the normal lending limit. However, the law does not require banks to renew the loans.

“This legislation will increase stability in Georgia banking,” Perdue said. “This is a bill that strengthens already existing lender-borrower relationships and allows loans in good standing to be renewed, which helps both the bank and the borrower.”

Current state law restricts banks from lending more than 15 percent of their capital to any one borrower. According to supporters of the bill, the current law has had the unintended consequence of disallowing banks to renew loans, even for trusted customers. The bill gives more flexibility to state-chartered banks whose legal lending limit has been lowered because of declining capital.

“This gives banks leeway to apply good banking principles instead of just applying code,” said Sen. Jim Butterworth (R- Cornelia), who carried the bill in the Senate. The bill, originally sponsored by Rep. James Mills of Gainesville, passed the House last week by 165-1 vote.

With Perdue’s signing of the bill, it immediately becomes law.

25 comments Add your comment

Mark my words

February 12th, 2010
7:51 am

From the state that has had more bank failures than any other. Wonder why?

Because of stupid ideas like this! Loan what little capitol you have left to the same people you’ve already bankrolled but now need to borrow more just to make the payments. In a Georgia sort of way…makes sense I guess. Hopefully the FDIC will have something to say about this.

Lt. Factual

February 12th, 2010
8:51 am

@Mark my words –

The FDIC did have something to say about it. They voiced their support, as this law actually allows state-chartered banks to match existing federal regulatory laws. But way to share your informed thoughts on something you obviously understand nothing about — kudos to you, you scholar and gentleman…

Mark Your Extraordinary Stupidity

February 12th, 2010
9:40 am

Mark,
Pull your head out of your hind end before you make a comment publicly that shows how utterly stupid and unknowledgeable you are about a given subject. Take your butt to another state if Georgia ain’t cuttin’ it for ya — we could use the corresponding increase in per capita intelligence your leaving would result in. Toodles!

Ashley Register, Donalsonville, Ga.

February 12th, 2010
10:02 am

Banking b ill. Is this a “Good old boy” deal or what?

outsider

February 12th, 2010
10:06 am

My My. You crackers are in a surly mood this a.m.

Joe 6-Pack

February 12th, 2010
11:39 am

What the banking lobby wants, the banking lobby gets.

Too bad the teachers, the lower level state employees, and the middle class folks in general, don’t have tons of money to contribute to the boys under the Dome.

Meanwhile, the bankers, the utilities, the insurance crowd, and the medical crowd continue to wine and dine, buy and sell, and pass those bills out of that Dome like candy out of a machine.

reddevilfan

February 12th, 2010
12:01 pm

Enter your comments here

reddevilfan

February 12th, 2010
12:12 pm

Hey Joe, You are quite right. The rich just keep getting richer, and it seems that is all the fed and state governments are concerned about.

Purue has no Shame

February 12th, 2010
12:29 pm

We lead the nation in bank failures and rather than tighten things up, Purdue makes it easier. We’ve got a bank closed on every major intersection, but at the only remaining intersection left they’re building a new bank. I guess they are the principals of the other banks that have been closed out. Stop the insanity.

tc

February 12th, 2010
12:39 pm

conservtives only choose conservatism when it suits them, if memory serves, repubs trashed many anti-predatory lending approaches of previous administration……and folks should read krugman’s views of repubs and medicare…..

Small Town Banker

February 12th, 2010
3:14 pm

Obviously, the people commenting don’t know too much about banking. This law helps the little guys, not the big guys. The reason they passed this law was to allow customers who were paying their loans to keep paying their loans no matter how bad of shape the bank in question was as far as capital was concerned. This is going to help a lot of our troubled banks in Georgia to stay afloat and hopefully make it whenever the economy recovers. I for one don’t know a lot of the small town banks who are in trouble that are making a bunch of money right now. Most, if not all, of the banks that this particular law will help are struggling big time right now. These banks have layed off many workers and even those workers didn’t make a how lot of money in the first place. This is actually smart legislation so as a small town banker who does not make a lot of money, Thank You!!!

TestyTurtle

February 12th, 2010
3:50 pm

Hey you pathetic, stupid moaners – poor people don’t create jobs, neither do businesses who can’t renew good loans because of the tight credit markets for state chartered banks. This bill puts small state chartered banks in equal footing with federally chartered banks. The people who complain about this bill are the same morons who elected Obama. Bitter, pathetic and hateful towards people who have done well in life.

Small Town Banker

February 12th, 2010
3:56 pm

Testy Turtle: Totally Agree!!!

tc

February 12th, 2010
5:01 pm

turtle you probably think those folks on wall st earned their money too

Base

February 12th, 2010
5:57 pm

From the bank failure capital.Sonny puts on another band aid.

Stockholder

February 12th, 2010
9:27 pm

Hey Joe 6 pack – I bet there are very few “teachers, lower level state employees, and middle class folks in general” who own bank stock at all. I bet they’d be better off concerning themselves with other issues that effect them directly; perhaps in the fields where they have training, if any.

MTA56

February 13th, 2010
8:39 am

Thanks to our good-ole-boy gov another law to help minorities borrow money they can never pay back. This of course will come back to hurt the middle class – hard working people & help the rich-executive jack-a$$ types who frolic on the golf course & work very little!

Bill

February 13th, 2010
8:42 am

In and of itself, this bill is probably reasonable. However, to describe locally chartered banks as “little guys” demonstrates a skewed perspective. These little guys played fast and loose trying to be big guys and got burned.

It would have been more reasonable to include in this bill some reasonable banking regulation, including consumer protection, and strict limits on predatory lending.

Federally, we need to restore Glass-Steagall.

tc

February 13th, 2010
9:28 am

don’t want small banks to go out of business, but let’s face it who likes bankers:

http://www.youtube.com/watch?v=qYtNwmXKIvM

Dr. Phil

February 14th, 2010
8:43 pm

I wonder if Sonny will get the ususal kickback on this one.

JP

February 15th, 2010
1:49 am

Gee the usual slow moving & soporific Leg & Gov moved awfully fast on this one, why? Bill has the right idea here, this has little to do with usual ‘consumer protections’. The Bill & now law might not be severely detrimental to most Ga. borrowers or citizens, but it is a ‘big boys’ banking bill. How to tell? We can read, that’s why:

“Current state law restricts banks from lending more than 15 percent of their capital to any one borrower. According to supporters of the bill, the current law has had the unintended consequence of disallowing banks to renew loans, even for trusted customers. The bill gives more flexibility to state-chartered banks whose legal lending limit has been lowered because of declining capital.”

Ok then, a loan representing possibly 15% of a banks capital? That’s some rich territory there folks, and only will apply to those few businesses needing more than say a few Million dollars. (Typical capitalization for even small banks is in the 10’s of millions). When’s the last time you singed up for a million dollar loan? Sure, some mortgages for some ‘McMansions’ are close, but again, we’re really not talking about the ‘typical consumer’. And the most typical ‘consumer’ for such a bill & now law? Are pretty wealthy developers (part of the reason we’re a leading bankruptcy state) and a few select major industries. Very few ’small businesses’ have payrolls or profits more than a 500K. Hence the more than usual traffic of the ’sockpuppets’ & lobbyists here trying to claim this is a ‘win’ for the ‘little guys’. If you’re a millionaire? You’re being well served. As usual. SSDD.

tc

February 15th, 2010
8:45 am

what say you turtle and stb?

A small guy

February 15th, 2010
12:49 pm

This is a good law for the small guys. (banks, small business owners and commercial property owners). It allows the property owner to re-fi his property at a lower rate. Thus making it more possible for the commercial owners to make payments when the small mom and pop store fronts quit making their monthly rental payments. Small business owners might be able to restructure their rental rates or re-stock their shelves with the new loans.Good for banks in that they will be on more solid footing….The reason for the speed. Many commercial balloons are coming due and all heck will break lose if those loans are not serviced. For all you other folks who want the banks to feel more pain keep your eye on the ball. Revenge will not get us out of this mess. Business will get us out.

JP

February 15th, 2010
4:11 pm

Well fine & good & has some merit to the thought. But it is not now, nor will it have much to do about the real prospects for small businesses in the future. Again, we’re likely talking about loans to ‘favored’ large industries amounting to 10’s of millions of dollars. The small guys are strictly incidental here. Once again it’s like feeding the birds by giving the horses oats. The ‘road apples’ that are left behind are seen as ‘good enough’ to warrant such sift use of & action by our State Leg. But never fear, the Big guys get what they want in a Hurry. Always. No need to wait or haggle & bargain. They get it Pronto! The continuing CRE crisis & crash might have something to do with it all, but mostly? If that’s the real reason here? It’s only slightly postponing the inevitable. And we the taxpayers pick up the pieces, again, after they default too. Heads they win, tails we lose. Again. SSDD.

Stump Barnes

February 15th, 2010
6:03 pm

Extend and pretend. Look how well this worked out for Japan.

The bottomline is that this new law allows small banks to have loans representing more the 15% of their capital. Now, think what happens when one of those loans (almost always made to a developer) goes into foreclosure. Recovery on commerical and residential developments is running at approximately 40%-60% of the loan value. So, if the loan is “only” 15% of the banks capital, a bank could have upwards of 8%-9% of its capital wiped out with one bad loan. How many local banks can survive that hit? Not many. Now let the loan amout be greater than 15% and you see how deadly this gets.

Extend and pretend. That’s not a plan is just denial. The debts are still there and the only way the assets are getting back to nominal value will be if we experience some hellacious inflation.