You are here

grade inflation

OCC: More Outstanding Banks!

Adam Rust's picture

Posted April 28, 2010

The Office of the Comptroller of the Currency has just released its latest CRA exam results. The news is hardly surprising - everyone passed!

In fact, of the 35 banks evaluated, 4 were given an "outstanding" and 31 were recognized as satisfactory. There were no "needs to improve" or "substantial noncompliance" ratings.

Grade inflation has run amok at the OCC for some time.

The OCC gave an outstanding rating to First National Bank of Audrain, located in Mexico, Missouri. This is in spite of the fact that FNB Audrain made no loans (zero) to low-income borrowers. There were plenty of low-income people in Mexico, Missouri. The OCC reports that it can characterize 16 percent of families in the area as low-income. FNB of Audrain made no loans in low or moderate income census

CRA Grade Inflation

Adam R.'s picture

Posted April 7, 2009

One of the comments made by policy makers studying the Community Reinvestment Act and its enforcement is that regulators have grown soft in their assessments of how banks and thrifts are serving the credit needs of communities.  Indeed, an apt comparison is to the grade inflation that exists in many other parts of society: students at colleges where the average GPA is 3.5 and Little League standards that dictate that all children get a trophy are just two of many examples.

In society, we have grown uncomfortable with calling out those who don't live up to expectations.  That has a lot of ramifications. Right now, it is most visible in our willingness to help out institutions whose products have not kept up with the expectations of consumers in the marketplace.

Do we want banks and thrifts to be measured by these new, lower standards?

Subscribe to RSS - grade inflation