The recent attention on state budget cuts and their impact on financial oversight turned to Georgia last week as the state's top regulator and Georgia Credit Union Affiliates lamented the loss of examiners.
Robert Braswell, state commissioner, acknowledged that the Department of Banking and Finance, which currently has 61 bank-CU examiners, has witnessed a drop of six examiners over the past two years as positions go unfilled. "That is something we would love not to have happen," he said.
Michael Mercer, president/CEO of Georgia Credit Union Affiliates, said the problem of examiner reductions caused by mandated cutbacks is frustrating considering the "DBF collects substantially more in the way of fees from financial institutions than it gets to spend for examination and supervision staff."
Moreover, he added, the cutbacks are regrettable considering the examiner staff's "tremendous experience gained over many years of service" in the examiner staff.
The focus on examiner attrition comes as Georgia endures the unenviable distinction of having the most bank failures-32 in the last two years-of any state. That record has drawn media attention and criticism from the Georgia Bankers Association, which questioned the wisdom of Gov. Sonny Perdue's decsiion to reduce the examiner force at a time of crisis.
Braswell said many of the Georgia banks that failed over the last two years got into trouble over real estate, land development and con-?struction loans.
But Georgia's 64 state-chartered CUs remain in "stable" condition and have not experienced the serious problems of community banks.
"They did not have the lending parameters to make those kinds of loans," said Braswell, adding, "that's a godsend."
Referring to bank problems, one Atlanta lawyer, Walt Moeling, ?told the Associated Press that if the state had spent adequate money on banking oversight, "the present crisis we've had in the banking system ?may not have been so strong." He labeled the phenomenon "de-?regulation through attrition."