Monday regulators come out to play

Everyone's an expert on Monday morning and bank regulators are no exception.

The Federal Deposit Insurance Corp. Office of Inspector General recently released a material-loss review of Florida Community Bank in Immokalee, which was closed Jan. 29. Regulators blamed the failure on a deficient board of directors and lack of management oversight of the institution's commercial real estate, development and construction loans.

Yet by now, reports like this have become predictable postmortems. The government lays the blame squarely on a bank's board of directors and management, who they say made risky loans and didn't prepare for the economic collapse. Regulators came to a similar conclusion with last year's spectacular failure of Naples-based Orion Bank.

But you've got to wonder: Where were the regulators when bankers were making risky loans during the real estate boom? After all, bank regulators have special access to all the documents at the bank and routinely spend days reviewing banks' books. They know everything management knows and should share equally in the blame.

These reports are long on “we-told-you-so” criticism of the bank's management and directors, but they fall way short of any blame for lapses of regulatory oversight.
It's something to remember the next time a politician says we need more bank supervision.