Wed., November 11, 2009 7:45am (EST)

State Lawmaker Wants Congress to Change Banking Rules
By Valarie Edwards
Updated: 4 years ago

ATLANTA  —  
Representative James Mills wants Congress to change banking rules to help curb the rate of bank failures in Georgia. (photo courtesy Georgia General Assembly)
Representative James Mills wants Congress to change banking rules to help curb the rate of bank failures in Georgia. (photo courtesy Georgia General Assembly)
With the 2010 legislative session just two months away, lawmakers have turned their attention to stemming the flood of bank failures which have swept the state.

July 2009 was an especially bad month for the state’s small banks, as federal regulators seized seven in a matter of weeks, including six in one day.

Now, one state lawmaker hopes to persuade Congress to reconsider how property is valued in light of the market downturn.

Representative James Mills, a Republican from Gainesville, chairs the House Banks and Banking Committee. He says Georgia’s banks are failing because federal regulators are putting undue pressure on local banks to balance their books.

“When a federal regulator comes and says this piece of property that was worth $1 million last year is now only work $500,000. So what do they do,” asks Mills.

“They turn to the small business man who has a loan out there and say, ‘OK, your payments can be the same, but we need $200,000 more dollars from you for our loan-asset ratio to work out because the value of your property has dropped.’”

Twenty one Georgia banks have closed this year. Twenty eight have failed since 2008.

Only Illinois comes close to that with 21 bank failures.