Community Banks Angry

It's no surprise that Ben Bernanke and Sheila Bair were targets of ire for the nation's community banks at last week's annual convention for the Independent Community Banker of America according to The Wall Street Journal (subscription required).

Tired of being tarred and feathered by congressman exploiting (perhaps creating) populist rage against bankers, the community banks point out that few of them have pocketed taxpayer money from the TARP program. In most cases, the community bankers stayed away from subprime loans and the other financial exotic products that drove many of their larger brethren to seek TARP funds.

Even Fed chairman Bernanke acknowledged that 95 percent of the nation's community banks were well capitalized at the end of last year. In fact, many of the banks that contact me looking for deals are community banks who have healthy balance sheets. If your business can demonstrate the ability to repay a loan, community banks are actively seeking you out these days.

That being said, you still have to be careful which community bank with whom you choose to conduct business. Of the 42 banks that have failed in the last 15 months, at least half were community banks. Their sin - loans to finance real estate development and construction projects that have gone belly up since the housing market collapsed. I warned you back in September 2006 these chickens could come home to roost.

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Tags : community bank , real estate loans , TARP , Ben Bernanke , Independent Community Bankers of America