FDIC chief: Bank data reported too slowly

Chris Jones

Wednesday, March 6, 2002 | 11:11 a.m.

The chairman of the Federal Deposit Insurance Corp. on Tuesday cited a debate about the lending practices of Southern Nevada banks to support his call for improved access to current financial information.

FDIC Chairman Donald Powell was in Las Vegas to address some of the estimated 1,500 community bankers gathered in Las Vegas for a four-day convention sponsored by the American Bankers Association. During his speech, Powell said the cumbersome reporting methods used by most banks and regulators are unacceptable in today's high-tech world.

"The data collection and distribution channels we use are outdated and more reflective of the typewriter and rotary-dial telephone era than this new age of high-speed connections and real-time information flow," Powell said. "I am always amazed that I cannot find out what deposit flows or bank earnings are doing until about 50 to 60 days after the end of a quarter."

While Powell said the FDIC collects more information than ever, he said the banking industry needs to develop a system that will make bank data available to authorized users as soon as it is filed.

Powell said the FDIC is working with other agencies to develop a better data reporting system.

"The technologies exist and we need to harness them," Powell said. "Reliable information can make the difference between a good loan and a bad one, or the difference between sound earnings and a struggle to stay alive."

In a press conference following his speech, Powell supported his case for improved data access by citing a debate that stemmed from a third quarter 2000 FDIC report that listed Las Vegas as one of 13 metropolitan areas at risk for commercial real estate overbuilding -- and therefore risky bank lending.

As regulators warned Nevada's bankers to cut back on their commercial loans or risk the possibility of losses brought on by a saturated market, many local bank executives downplayed the warnings and said the FDIC didn't understand the then-steady demand for such developments in Southern Nevada.

Powell said he was unfamiliar with the current Las Vegas lending situation. But he said similar debates would be less likely to occur if both regulators and lenders had access to current and comprehensive information.

"(The Las Vegas warning) is just another point for making sure we have accurate and timely data," Powell said. "The more we have in real time, the more we can serve the industry and the American public."

John Guedry, president and chief executive officer of Las Vegas-based Business Bank of Nevada, said Powell's call for instant financial data -- even on a partial basis -- would help bankers to make better decisions. Still, he said such a system would not offer a total solution.

"There is some general information that could be made available quickly that would give an investor a pretty good picture of the health of a financial institution," Guedry said. "You still have to review the information before you report it so there will always be some delay.

"Also, there will always be some issues in terms of a local perspective versus a regional perspective. ... (Outside regulators) are never going to be quite as accurate as those who are in the market."