oped Community and economic impact of questionable proposed banking rules BY JOHN R. BURAN relied on those products and services would be are only two examples. The rules run on for hun- deprived of affordable credit for homeowner- dreds of pages, and so there are more examples Our community and economy are at risk ship or business activities. that impact lending at current levels. again, this time due to potential new banking The rules present key challenges and one Other government agencies are questioning rules that could affect the ability of banks to such area is mortgage lending. At a time when whether Basel III is a good idea. On July 17, lend and communities to rebound. These pro- the government lacks a long-term solution to 2012, Peter T. King, U.S. Congressman from the posed regulations, called “Basel III,” define housing finance, the proposed framework would third congressional district, and other members how banks measure risks and their level of impede mortgage lending that banks have of- of the House Financial Services Committee, funds, or “capital” levels, that they would need fered successfully for decades. Basel III puts raised their concerns in a letter to the regulators. in order to cover those risks. It works like your mortgage loans into two “categories,” with the They agreed that “Certain steps are necessary decision on savings: you can choose to save more favorable Category I defined very nar- to restore confidence in our capital markets. everything and not have any money to spend on rowly. In many cases, lenders offer substantially However, we want to make sure any response to goods and vacations. If all consumers did the below-market interest rates to borrowers in ex- the financial crisis does not needlessly hamper same, then you can imagine the impact on the change for the borrowers’ acceptance of future economic recovery in our communities.” local communities. If all banks must set aside risk in rising interest rates; known as adjustable I support this level of questioning by the more capital, then they do not have that money rate mortgage loans or “ARMS.” The proposal House Financial Services Committee. The Com- available to lend in the community, resulting in would make it much more difficult for many mittee had heard from the community bankers, reduced economic activity. local banks to meet the new capital levels, caus- that their ability to lend and provide liquidity There are restrictions and costs related to ing them to decrease their ARMs lending, which in the local markets would be curtailed. That is regulatory requirements. These proposed rules again would reduce economic activity. where our communities could be impacted. are applied against many kinds of loans, in- Category II is so tough that banks will have The proposed rules are applied not just on cluding residential 1-4 family mortgage loans, a very difficult time extending loans secured new loans, but all loans, so there would be an development and construction loans, business by home equity. The proposed rules on home immediate impact on the banks and our com- lines of credit and home equity lending. The equity lending are a double effect, because your munities. They are retroactive, so, if banks made rules ultimately have an effect on communities first mortgage must be reassessed by banks us- a decision to create a loan years ago under old because it will be more difficult for the banks to ing the new rules when you have a home equity regulations, this stricter set of rules must be ap- lend to both consumers and businesses, and still loan. Banks must determine if it is possible to plied against that loan as well. to meet the regulatory capital levels. In addition, continue to offer home equity loans, absorb the banks may need to increase the price for other related impact from the first mortgages, and still John R. Buran is president and products and services. In turn, borrowers who meet all of the regulatory requirements. These CEO of Flushing Bank Inquiring Photographer BY SWEETINA KAKAR What is your New Year’s resolution? To be healthy To stay I wish that for the coming healthy the world 100 years. through will be able the year. to see peace. Gerry Kohlmann North Shore Towers Courier Rita Linder Hy Linder My resolution I hope that I hope to is to be a better all of my live to next person than friends will be year so I am I was the year here with me, able to have before. both healthy another and happy. resolution. n January 2013 9 Lois Weiner Adela Coven Danny Broad
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