If Only We Could All Be Central Bankers

A New York Times blog in June wondered why little old Regions Financial Corp. and its ex-CEO are being set upon by Federal Reserve watchdogs, while the European Central Bank is giving Euro banks every opportunity to cover their bad loans to Greece.

“If only Dowd Ritter had been a central banker, rather than a commercial banker, he could be retiring with praise, rather than facing possible legal liability, ” the Times said.

Both the Federal Reserve Board and the Regions’ audit committee are on Ritter’s back, critiquing the way the bank may have been slow to report troubled and defaulted loans.

Like many banks, Regions has been in trouble since the 2008 financial crisis came to a head. Like many other banks, it borrowed federal TARP bailout funds. But unlike most large banks, it hasn’t yet paid the federal money back.

At the same time, the bank’s Morgan Keegan brokerage subsidiary has troubles of its own—recently sorted out with an agreement to pay $210 million to satisfy federal regulators who claim the firm overstated the value of its outstanding loans.

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The bank’s stock value is up—now about $6 from a low of $3 per share—but it’s still jittery.

The Nashville Tennessean reported on its talk about Regions with one industry analyst: “Regions is more vulnerable than their peers. Their loan portfolio has a higher percentage of nonperforming loans, ” said Erik Oja, a bank analyst with Standard & Poor’s Equity Research. “I think the bank would be exposed should the economy weaken.”

It’s been four years since the company posted an annual profit, and it has had to write off $3 billion in bad loans.

While troubles hound the bank, it has announced plans for a new wealth management group, combining trust, insurance and private banking in a unit aimed at providing services for its wealthiest clients. Head of this new unit: Ritter’s son, Bill.

By Nedra Bloom

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