Regulators ought to be looking forward, not backward, he said. What they shouldn t be doing, and there is always a human tendency to do this, is looking back on old decisions and becoming more restrictive. So far, regulators have been pretty balanced, according to Allen W. Sanborn, president of RMA, the trade association of bank loan and credit officers. Over the next 12 months, it will be clearly important that the regulators maintain that balance, because the economy is going to be shakier, he said. And it is important for bankers to recognize challenges and get to work on them.
Most experts agree the economy is far from credit starved.
True, highly leveraged borrowers are finding it difficult to get credit, and even solid borrowers are paying more or being forced to accept tougher terms. But cash is still available. And barring a big disruption in the economy, most people expect the banking industry to weather this storm. Energy supply, pricing, and the mess in California is the big if in most minds. Beyond the banking industry s bigger capital cushion, experts point to a slew of other factors that reduce the odds that a wave of bad loans will trigger a credit crunch.