An example: I got a call from a banker in Indiana. He said “We finally took our first big loss of the cycle.”

I said what happened?

He said “this guy, we loaned him $2 million for a hotel. He was paying. We thought everything was fine. He walks in and throws the keys on the desk and says “I can’t do this anymore.”

Borrower fatigue.

Then Gerrish offered comments about banker and regulator fatigue:

Those of you who are looking for opportunities, find yourself an old and tired banker because there are a lot of them out there. A guy called me and said “Jeff, can you find us a buyer for the bank?”

“What, are you crazy? Your bank is rated 2; you survived this entire mess; this is not a good time to be selling unless you have to because the prices are so bad.”

His comment was, “I am 57 years old, I know we are going to go through another cycle like this, I don’t want to be here when we do.”

Banker fatigue.

We’ve got borrower fatigue, we’ve got banker fatigue and we have a little bit, I would suggest, regulator fatigue. I am beginning to see a little regulator fatigue which is translating itself into, ‘kinder and gentler’ regulators. Different regions are different. I nicknamed one ‘home of the screaming regulator.’ Four years ago meeting with a bank that went from a 2 to a 5, the regulators would sit at the table and would be pounding on you and your client.

“You are going to do this, you are going to raise capital,” and you are sitting there going, “that is absolutely impossible.”

A few months ago I had a meeting at a 5-rated bank and there were eight directors, me and a lot of regulators. The meeting was basically “we know you are 5 rated, we know you have capital, you are likely to fail, and we hope things work out.”

A little bit kinder and gentler, but I don’t know if I attribute that to regulatory fatigue or the fact that it just isn’t that much fun for them anymore either.

We’ll have full BHCA Spring Seminar coverage in the June 1 edition of NorthWestern Financial Review.

Former Federal Reserve Bank of Kansas City President Tom Hoenig, now a director at the FDIC, not only approves of the Volcker Rule, which would curb proprietary trading at commercial banks, but would like to see the largest banks split up in order to separate investment banking from traditional banking. Hoenig has been talking along these lines for quite some time, including at a House subcommittee hearing on Friday. On April 26, he share similar views in Des Moines, telling some 270 bankers that the largest banks should be broken up along six distinct business lines.

“If you look at the largest institutions, there are six lines of business,” he said. “There is the traditional commercial bank. In addition, there is investment banking, there is managing and advising, there are certain kinds of proprietary trading, and broker/dealer activities, and managing investments in trust services.”

Hoenig said the law should segregate these lines of businesses into separate corporations, just as the Glass-Steagall Act separated investment and commercial banking before the Gramm-Leach-Bliley Act was passed in 1999.

Breaking up the largest banks, he said, is not a matter of “getting even,” but a matter of correcting perverse incentives. He said the federal safety net incents the largest institutions to grow and take risks that smaller institutions simply can’t take. Just about the same time Hoenig was making these comments, J.P. Morgan Chase was engaging in highly risky trades that cost $2 billion.

Be sure to read a full report on Hoenig’s April 26 comments in the May 15 edition of NorthWestern Financial Review.

Ryan said there will always be a place for community banks because small business owners demand the kind of attention that only smaller banks can deliver. He expressed concern, however, that on-going industry consolidation has been concentrated among the industry’s smaller banks. “All the net decline in the number of banks has been among banks with $100 million in assets or fewer,” he said, citing a trend going back to 1992.

Individual judgment and the ability to tailor loans to specific situations is the hallmark of smaller banks, he said, but that  mode of doing business is generally out of favor with regulators. Regulation is generally about standardization, he said, whereas smaller banks shine when delivering specialized services. “We have to figure out how to regulate to the institution, not to an arbitrary standard,” Ryan told 270 bankers participating in the annual Day with the Superintendent event on April 26.

Regulators need the flexibility to apply regulations where they are needed. It is a mistake to apply regulations equally across the board to all institutions, and he said dividing the industry into two groups — one with large banks and the other with small banks — still does not provide appropriate distinction for appropriate regulation among a myriad of institutions.

“We need to be smarter about regulation,” he concluded.

Brown began a banking career 36 years ago at the bank owned by his family, Security State Bank in Hannaford, N.D.. Today, the bank is part of the Bank Forward organization, which has 17 offices throughout North Dakota and northern Minnesota. Brown was president of the ICBND in 1985. He also has served on the North Dakota State Banking Board and on the board of the Bank Holding Company Association.

The top leadership post of the association has been vacant since Don Forsberg left the association suddenly earlier this year after a decade of service. In addition to its membership and advocacy roles, ICBND operates a purchasing exchange and a credit card operation.