EDITORIAL: Success is now an evil to FDIC

The beat goes on that our current problems have been due to the lack of government regulations. Well, those doing the drumming should look at how government’s heavy hand is currently going after a bank near Boston that is being penalized for being too successful by not lending to non-creditworthy borrowers.

East Bridgewater Savings Bank has stood out from the current swirl of chaos in the banking industry. While other banks have been failing, this bank, with $135 million in assets, has not a single delinquent loan or foreclosure on its books. It is not just breaking even, it is making profits.

The bank’s secret to success? The Boston Business Journal reports that it has only made loans to credit worthy borrowers. Shocking strategy, right?

So how have government regulators responded? They penalized the bank with a “need to improve” rating under the Community Reinvestment Act. Out of five possible scores, that is the second worst rating. “There are no apparent financial or legal impediments that would limit the bank’s ability to help meet the credit needs of its assessment area,” the FDIC claimed in evaluating the bank.

Translation: The bank is in trouble for not making “lower quality,” riskier loans to borrowers who are less able to pay back their mortgages.

Instead of wondering what new government regulations to impose, the East Bridgewater Savings Banks around the country.

We hope the politicians stop blaming the banks for doing what the politicians are still forcing them to do.