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Florida Banks Plead for Relief from Regulators

July 12, 2010 - 6:00pm

With 30 state banks failing since 2007, and BP oil lapping at Gulf shores, the Florida Bankers Association is pleading for relief from Washington.

In a letter to the Federal Deposit Insurance Corp. and the Federal Reserve Board, FBA president Alex Sanchez requested a 12-month waiver from higher capital requirements and a suspension of the use of appraisals for loans.

"As the oil spill intensifies, there will be no accurate way for an appraisal to accurately reflect the true worth of the property over a long-term horizon," Sanchez wrote.

Further, Sanchez asked that regulators "minimize the number of orders placed on banks, such as cease and desist orders on the raising of capital that require public disclosure.

"As more and more orders are released to the public, there is a further chilling to the capital coming into Florida," he stated.

The FBA's request covers all banks in the state, a number the association pegged at "nearly 300."

Industry analysts cite Hurricane Katrina as a precedent for such sweeping relief. Following that 2005 storm, banks in Louisiana, Texas, Alabama and Mississippi were granted a three-year waiver from loan-appraisal regulations. But federal regulators did not offer a full exemption from capital requirements.

University of Central Florida economist Sean Snaith stated, "If the Gulf Coast counties lose just 10 percent of their tourism and leisure jobs and spending due to the BP spill, the estimated statewide losses will be nearly 39,000 jobs and $2.2 billion in spending."

On the high end, Snaith estimated that losses could total 195,000 jobs and $10.5 billion in lost spending.

Sanchez also cited a recent Moody's report warning that the potential impact of the spill could cause "a double-dip to Florida's economy."

Doubly challenged by a deep housing slump and tight credit markets, Florida bankers say they need some breathing room.

"Unless we work together in giving our banks more time to work through this oil crisis ... we will have massive small business and even more bank failures causing a steep increase in unemployment," Sanchez stated in his letter dated Monday.

Suffering the nation's third highest number of bank failures after Georgia and Illinois, Florida bankers -- especially those in the Panhandle -- fear that the Gulf oil gusher will swamp their struggling bottom lines.

The Wall Street Journal reported Tuesday that Fort Walton Beach-based Florida First City Banks, Inc., had suspended its efforts to raise $3 million after the spill spooked potential investors.

The FDIC and the Fed declined to say when or if they would act on the FBA request.


Contact Kenric Ward at or at (772) 801-5341.

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