+
May 2013
15
Bank
notes
Community Bankers Association of Illinois
E
ffective
January
1,
2013,
bank
regulators
implemented new standards
for municipal investments
that require most banks to adopt a new
approach to the credit analysis process.
The biggest take away is clear: credit
ratings will no longer serve as sole
justification for credit quality.
Fortunately for most community
banks, credit ratings have become
an afterthought in the credit review
process. The first blow came several
years ago when, in the wake of the
financial crisis, the lion’s share of
monoline credit insurers lost their
AAA ratings and the associated ratings
on insured municipal bonds. Investors
soon realized the importance of
analyzing the underlying credit profile
of the municipality, regardless of
ratings or credit enhancement features.
Regulators have also addressed the
New Regulations
for
Municipals in 2013:
Dodd-Frank, Section 939 A
Drew Simmons, Vice President –
Financial Strategies Group,
THE BAKER GROUP LP,
Oklahoma City, OK
The biggest take away
is clear: credit ratings will
no longer serve as sole
justification for credit quality.
