Disucssion on FDIC examiners to banks

Terry says:
[message/possible fact/rumor]Talking to bankers, the examiners continue to press for more "mark-to-market" on loans that the banks intend to hold to maturity, for a capital level of about 12% TCE (not Tier 1), and for a big cash kick-in to the FDIC to fund the DIF.[His own or his friends' view?] Only ways to get there are to raise more capital, sell assets or to cut credit, including consumer, commercial and construction. There is going to be no one left to fund conusmer purchases, inventory purchases and capex expenditures.

Basel Too says:
Several community banks down here recently announced suspension of dividends. Another bank raised capital for "FDIC-funded expansion"...

Terry replies:
That works, too, but does not lead to a willingness of investors to put up more capital. Also, this is a frequent item addresses in the non-public MOUs with the regulators - wonder how many of these banks are under MOUs that may ripen to C&Ds?

some investor guy replies to Terry's "Only ways to .."
Terry, it's not just banks that can fund these things. People can pay cash. They can sometimes borrow from nonbanks (has anyone seen VC or PE lately?). There is this new/oldfangled thing called lay a way. I wouldn't be terribly surprised to see more barter.

Terry replies:

Regarding an earlier post on replacing bank lending with PE/VC money - not easily done for many industries, as the PE/VC wants to know the exit strategy, be it a sale or public offering. Valuations are also important.

Even for VC/PE funded companies, my contacts have said that they are being less free with giving additional funding to portfolio companies - they want the insiders to be squeezed first.

For many businesses, the VC/PE window is closed.

in reference to: Chicago Purchasing Managers Index Declines in September | Hoocoodanode? (view on Google Sidewiki)