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| Appreciate that you take the time to type detailed posts with thorough explanations. I agree with a lot of what you said.
However, there are so many issues with actually implementing standardized credit scoring to accommodate mark to market of loans. The credit risk component is simply too subject. Even 2 different examiners will come up with 2 different opinions on a line as I'm sure you have experienced. Loans aren't bonds with Moody's giving ratings. It's all background noise to me. If they tried to implement, the huge banks would have to go first. Once the politicians realize all the negatives, especially increased costs on consumer loans to cover the new overhead burden, they will override. Because that would take an army of staff at all banks.
Today unlike a bond, if Suzie gets a car loan, she isn't giving quarterly financials to see if credit quality is deteriorating.
Now, if banks have a portfolio of loans that they intend to actually sell, then those may be the loans where this could become implemented. But I still believe the responsibility to risk rate should fall one the purchaser. When both parties are banks, both should know what they are doing and not need big government looking out for them. | |
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State of Ag Banking
