WASHINGTON–The Office of the Comptroller of the Currency (OCC) is expressing concern that careless underwriting standards at banks is causing rising credit risk in bank lending portfolios, which it said could mean problems over the long term at those institutions.
The OCC released its opinion as part of its semi-annual Risk Perspective report.
"In the area of credit risk, the warning lights are flashing yellow,” said Thomas J. Curry, Comptroller of the Currency. “Regulators and bank management need to act now to prevent those risks from becoming reality. We can’t afford to wait until the warning lights turn red."
In remarks offered during a conference call, Curry said that jeopardizing "sound underwriting" by offering loans to just about anyone is not the route banks should take to grow their business.
"As the economic cycle turns, we see banks and thrifts reaching for yield and growth, sometimes extending their reach at the expense of sound underwriting, strong risk management, and adequate loan loss provisioning. OCC examiners will be paying close attention to each of those areas in the coming months," Curry stated.