Stern Message for Bank Officers: Comptroller of...

Stern Message for Bank Officers: Comptroller of the Currency Robert L. Clarke ordered commercial bank officers to promptly correct “a significant number of fundamental deficiencies” in their real estate lending operations. Clarke, in a strongly worded memorandum addressed to board members and chief executives at 4,200 nationally chartered banks, singled out three areas for criticism. First, banks are not requiring borrowers to invest enough of their own money in real estate projects. Second, “too many banks have failed to obtain accurate, independent and timely appraisals” of the real estate projects to which they are lending. Also, some banks are engaging in practices that make it difficult to determine when a real estate project is going bad.