I only spent six years within a community bank, but considering when those years fell (i.e., from April 2008 to June 2014, during the thick of the Great Recession), I learned an awful lot about credit risk management, even though I was only incidentally involved in the credit management function as a member of the management loan committee and the board of directors. During that time, I learned a very important principle of credit risk management: never extend periodic loan payments indefinitely because it impairs the bank's ability to monitor the credit health of the borrower. I learned quickly that trying to manage a credit portfolio without having such critical information as the borrower's history of making loan payments in accordance with the original terms of the loan was like trying to fly a plane through a storm without the critical monitors located on its flight control panel. Because I learned these lessons, my initial reaction to the response that banking regulators and Congress had to the potential credit problems posed by COVID-19 pandemic was one of confusion. Continue reading >