Friday, March 04, 2011

SEC Probe Examines Bank-Loan Practices

Source: The Wall Street Journal

The Securities and Exchange Commission is scrutinizing U.S. banks that have restructured troubled loans in order to make them appear healthier than they really are, according to people familiar with the situation.

Officials at the SEC are seeking information from an unknown number of regional and community banks with large concentrations of commercial real-estate loans, these people said.

The agency is zeroing in on a variety of practices used by financial institutions as they work to clean up loan portfolios that were bruised by the financial crisis or recession. While the U.S. banking industry is in recovery mode, many banks still are weighed down by soured loans.

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