Comptroller May Demand Boost in Some Loan-Loss Allowances
Gross, Laura, American Banker
SAN JUAN -- A substantial number of banks in the United States have not set aside adequate loan-loss reserves. And if they do not boost those reserves -- and quickly, it appears -- the Comptroller of the Currency is going to do it for them.
That's what Michael A. Mancusi, senior deputy comptroller for national operations, told reporters following a speech he gave Wednesday at the 70th annual Robert Morris Associates fall conference. Mr. Mancusi's speech originally was to have been presented by Comptroller C.T. Conover, but Mr. Conover had to cancel the day before.
Pressed for the number of banks with inadequate loan-loss reserves, Mr. Mancusi said it was "a minority" but "a substantial enough number that we are concerned."
One source in the Comptroller's office said the number could be 2,000, but that he was just guessing.
Mr. Mancusi said he was not just discussing smaller institutions, but banks of all sizes. Pressed again for a figure, he repeated that there were a "sufficient [number] for the regulators to be concerned."
"If bank managements don't put procedures in place to periodically take a realistic look at their loan portfolios and establish representative valuation reserves, we'll be forced to look at the portfolio and make a judgement on reserves ourselves," Mr. Mancusi said.
He said the Comptroller's office could do this by virtue of its enforcement powers if it were necessary to protect the safety or soundness of an institution.
There are currently 738 national banks on the Comptroller's problem-bank list. …