ABA Banking Journal - August 2011 - (Page 16)

ABA Community BAnking  |  STRESS TESTING Time for stress testing? Experts say this tool, carefully applied, can improve bank financial management By STEvE COChEO, ExECUTIvE EdITOR W hat do the space shuttle program and a speech in Switzerland have in common? The first represents a major credit concentration—albeit a farfrom-obvious one that many lenders may not have considered. But now that the Shuttle program has ended, NASA will lay off 8,000 on Florida’s east coast. Many of those employees have borrowed money, or are customers of businesses that have borrowed from banks. Compound this with the potential loss of deposits and other banking relationships, and the grounding of U.S. space efforts takes on a very earthbound cast, notes risk management consultant Michelle Lucci of Bankers Toolbox. Lucci wonders how many lenders took NASA’s future into account, and if they know what impact it will have on their banks. And Switzerland? The city of Bern lies far beyond the radar of American community banks, yet what New York Federal Reserve Bank President William Dudley told a meeting of the Group of 30 there in late May was of more than academic interest. Dudley discussed American regulators’ experience with stress tests. These tests have loomed large three times in the recent past in the U.S., most recently in the Dodd-Frank Act. Each time, the government imposed them on parts of the industry. Some now say that community 16  |  ABA BANKING JOURNAL  |  august 2011

Table of Contents for the Digital Edition of ABA Banking Journal - August 2011

ABA Banking Journal - August 2011
Content
Chairman’s View
Editor’s Column
The Economy
Bank Notes
ABA Community Banking
Pass the Aspirin
Tech Topics
Cover Report: Branch Banking
Branch Design Portfolio
Will Local Players Win Reverse Mortgage Turf?
Compliance Clinic
Compliance Inbox
ABA Resources
Legal Issues
First Person

ABA Banking Journal - August 2011

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