Wednesday, October 15, 2008

Wayne Abernathy American Bankers Association Financial Institutions Director

"banks are already very well capitalized, 95% of all the banks in the country have the highest level of capital that the regulators require"
"a loan is an asset"

1 comment:

Wayne Abernathy said...

I compliment you on your idea of calling public people out for making erroneous statements, particularly when they know that they are wrong. It should be done more often. But to be credible, you should do some research before you are so bold to proclaim something a lie. Otherwise, your own credibility is brought into question.

Now I do not question your good will or good intentions, but with regard to the two entries that you assign to me, you miss the mark.

The data on bank capitalization come directly from the FDIC. They are not my data. They are FDIC data.

And one of the first lessons of accounting will teach you that a loan that a bank makes is recorded on the bank's books--under all accounting rules--as an asset. Not all loans turn out to be good assets, but they are on the asset side of the ledger. That is just basic accounting, not rules that I made up. It is recorded as an asset, because a loan made by a bank is an obligation by its customer to make payments back to the bank with interest.