In a sign that the banking business is bouncing off the bottom of the economic trough, the Federal Deposit Insurance Corp. is ready to start insuring new charters.
It will be a trickle, not a torrent of approvals, but it is a significant shift considering the agency is widely viewed as the single biggest reason why just two banks have gained deposit insurance this year.
In a recent interview, FDIC Chairman Sheila Bair conceded the agency had let too many new banks open with business plans dependent on commercial real estate lending or on brokered deposits.
"We were not as scrutinizing as we should have been on deposit insurance applications in the past," Bair said. "We are going to be looking for banks that are committed to developing a core deposit base and a reasonably well-diversified business plan and good management and good capital.
"If they meet those kinds of requirements, there is no reason they shouldn't get approved."
Chris Spoth, senior deputy director in the FDIC's division of supervision and consumer protection, reinforced that in an interview this week. "We would encourage and we do expect, it's hard to predict when, traditional community bank proposals to come through," he said. "And we expect we would approve" applications pledging adequate capital, qualified management and diversified business plans.
During the refinancing boom of the past 18 months, community banks have expanded their presence in residential mortgage lending, and some large regionals have entered the warehouse lending arena. However, many will only lend in their bank footprint.
