Magazine article The RMA Journal

"Survey Says." We're on the Right Track

Magazine article The RMA Journal

"Survey Says." We're on the Right Track

Article excerpt

When I joined the banking industry as a trainee in 1965, one of the first tools I was given to begin the daunting task of credit analysis was the RMA Annual Statement Studies. Indeed, armed with the Statement Studies and RMA'S Principles for the Exchange of Commercial Credit Information, I quickly learned how to conduct a successful credit review of an existing or prospective client. RMA played a key role in equipping me with fundamental risk analysis tools that I used throughout my career.

Much has changed in the financial services industry since 1965, but there are two immutable truths:

1. Risk can he managed.

2. The institution that weaves into its very DNA a thoughtful, responsive, and well-understood risk management process not only survives, it thrives.

We are experiencing a much tougher economic environment than we faced a year ago. The largest state in the U.S., California, is on what I like to call code alert. We really do not know what the impact of the energy situation in California will be at this point. Nationally, layoffs and unemployment insurance claims are rising, although they are doing so from all-time lows. The Federal Reserve has, in five separate actions over the past five months, reduced the Federal funds rate to 250 basis points and is poised to take further action as necessary.

Clearly, the risks are up and banks' balance sheets will feel the impact. We are at a point where the problems appear to have been recognized by bankers and regulators alike. We also do not see any evidence of overreaction. Nonetheless, there can be no doubt that losses will tick upward given the slowing economy.

This is certainly an interesting time in which to become RMA's sixth president and CEO. I am very proud of this honor and the association I've come to lead. During my short time here, I've traveled extensively, attending four round tables, two council meetings in Washington, D. …

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