Dive summary:
- A report from the Comptroller of the Currency and the Federal Reserve helps document how greed – and ignoring investment guidelines – helped sink banks.
- In the report, the agencies say that 13% of banks that went past a recommendation to put no more than 100% of risk-based capital into construction lending failed in the 2008-2011 period.
- The report slapped banks that went too heavily into commercial real estate investment, ignoring a recommendation to keep that activity below 300% of a bank's risk-based capital, and said 23% of banks that ignored both the investment and lending guidelines have failed.
From the article:
About 80% of the losses covered by the FDIC insurance fund from 2007 to 2011 can be attributed to banks exceeding the recommended 100% construction criteria, OCC said. ...
