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Regulators encourage lending to small businesses

Federal and state regulators encouraged banks and credit unions to lend to small businesses, saying in a joint statement Friday they would not criticize loans made to borrowers in troubled areas or industries as long as the borrowers were creditworthy.

Bankers welcomed the statement, although some said it served political needs more than regulatory ones.

"I'm going to keep this close on my desk, and the next time an examiner questions a loan, I'll show them this," Kevin O'Connor, president and chief executive of Bridgehampton National Bank, said of the statement, which he suggested was aimed more at the large banks that have reduced lending.

But the chief lobbyist for the Financial Services Roundtable, which represents the largest banks, said it was a positive gesture aimed at all banks. "We applaud the statement," said Scott Talbott.

Robert Allen, president and chief executive of Farmingville-based Teachers Federal Credit Union, also welcomed the statement, but he and other lenders said it was likely issued in response to political pressure to encourage lending.

One banker, who did not want to be identified to avoid antagonizing regulators, said the statement was meaningless and he doubted examiners would ease up at all.

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