Thomas Dujenski, Atlanta Regional Director of the Federal Deposit Insurance Corporation, drew an audience full of local bankers to the Buckhead Business Association’s regular breakfast, but his comments were largely confined to giving information about the role the FDIC plays in regulating banks.
The FDIC was created in 1933 as a result of the Great Depression, he told the audience. Nearly eight decades later, the FDIC is still the watchdog of the banks, making sure they’re lending fairly and aren’t taking the kinds of risks that drove the economy into a recession in 2008.
Dujenski has spent 28 years at the FDIC and his region includes Alabama, Florida, Georgia, North Carolina, South Carolina, Virginia, and West Virginia. In many ways, Georgia was a poster child for banks that took needless risks. He said of the nearly 400 failures nationwide, the Atlanta region accounts for 36 percent of those failures. He said 67 banks in Georgia have failed since the crisis began.
So in short, Dujenski has been busy.
“This has clearly some of the most challenging times I’ve seen in 28 years,” he said. “This is definitely some of the most interesting times, and you know you’re in trouble when you use the word ‘interesting.’”
He said in Georgia’s case, “There was a big influx of people and some of the institutions were engaging in high concentrations of commercial development, subdivisions those type of things, and they got into concentrations that exceeded what their capital was. When the economy turned, these assets went bad because the commercial real estate market had cratered.”
The BBA members peppered him with questions, but Dujenski made it clear he wasn’t going to talk about any specific banks.
One person asked if Dujenski thought it was too easy to open a bank in the United States.
Dujenski said the U.S. banking system is complicated but still the best in the world because of the intense regulation of banking practices. He said a disproportionate number of “new banks” failed during the crisis.
Another person, Doris Parker, grilled him about her problem refinancing one of her properties. Parker said she has a second home in Naples, Fla., where she’s only paying interest. None of the nearly $1,750 she’s paying per month goes toward the mortgage principal, she said, but she said lenders are only willing to refinance her primary residence in Buckhead.
“We’re being told Obama said, ‘Help those who have a primary residence only,’” Parker said.
Dujenski said the general position of the FDIC is that all banks should consider refinancing to prevent foreclosure.
“We encourage all banks to take a look at refinancing,” he said. “Foreclousres aren’t good to anybody… We’re encouraging banks to work with borrowers to try to refinance loans to prevent foreclosures.”
When asked what she thought of Dujenski’s answer, Parker said, “That’s just b.s.”
Donna Kain, a business banker with Fifth Third Bank, walked out of Dujenski’s presentation satisfied.
“He was right on target with everything he had to say,” Kain said.