Loan Officers and Bank Examiners
Banks specialize in tailoring commercial loans to businesses. Not only are the loan officers relevant, but also the bank examiners as well.
Unlike corporate bonds, commercial bank loans are chock-full of special features such as covenants, collateral requirements and guarantees that enable banks to extend credit to companies that are too small, or whose credit characteristics are too challenging, to have access to the public debt markets. The commercial loan officer is responsible for making this happen by working closely with the borrowing company’s management-and working within lending policies of the bank. The loan officer must have a solid understanding of financial accounting, strong interpersonal skills and a knack for negotiating.
At many banks, loan officers are also responsible for generating new business. Therefore, this job often has a big sales component. This requires that the loan officer cultivate strong ties with the local business community.
Banks are audited about once per year by the regulators to determine whether the bank is solvent and whether its policies and procedures are prudent. These auditors called Bank examiners and they work in teams. In the United States there are about 11,000 banks and thrift institutions to examine. There is no shortage of bank regulators in United States, nor elsewhere in the world. At the national level, the office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve each have extensive bank examination staffs. At the state level, all 50 states have their own bank authorities who also regulate and examine banks. Bank examiners rate banks on a number of different dimensions, including the adequacy of the bank’s capital, its asset quality, its overall management skill, its risk management procedures and liquidity.
Although these 2 jobs of the financial sector each have their own responsibilities, they are inextricably tied to one another. A bank examiner will determine if the loan officer is doing their job to make the bank profitable and if not will take action.
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