Commercial Lending Review articles from May 2006

Commercial Lending Review archives from May 2006

Designing an effective and valuable credit risk--rating system: a valuable system can improve the planning, forecasting and profitability of credit risk-taking activities.
May 1, 2006... Most every bank engaged in commercial lending has a risk-rating system. Indeed, in most jurisdictions it is required by regulation. Yet if a sample of executives were asked its purpose, effectiveness and value, I suspect that most would...

New health care amendments to the bankruptcy code: what are some issues that may arise in administering these new provisions of the Bankruptcy Code that affect health care cases?
May 1, 2006... On September 26, 1997, Alfred Siegel faced an urgent dilemma. He had been appointed two days earlier as the bankruptcy trustee for Reseda Care Center, a 99-bed nursing home in the West Valley neighborhood of Los Angeles, and he had no money,...

Commercial lending and bankruptcies of new public companies: what factors could enable lenders to cherry-pick among the most creditworthy new public companies?
May 1, 2006... Theory suggests that commercial lenders may reduce the information asymmetries that are associated with lending to small- and medium-growth firms. A commercial lender can obtain information about the firm in the course of lending that the...

Correlation of default and recovery rates on corporate debt: does probability of default correlate to recovery rate?
May 1, 2006... The relationship between default rates and recovery rates on corporate debt has received considerable attention in recent years. Most observers highlight the correlation between annual default rates in the U.S. corporate bond market and the...

Structural inefficiencies can cripple your borrower: a better understanding of structural inefficiencies can lead to both more booked business and fewer problem loans.
May 1, 2006... During their careers, most lenders analyze countless borrowers across a broad range of industries. To make the task manageable, fundamental credit analysis techniques have evolved. Financial statements are spread, a borrower or prospect's...

How to use the changing components of the corporate annual report: examples show how to use new, SOA-required reports.(Sarbanes-Oxley Act of 2002)
May 1, 2006... Tae amount of information required in a corporate annual report continues to increase. Most recently, additional reporting requirements brought about by the Sarbanes-Oxley Act of 2002 (SOA), the Public Company Accounting Oversight Board (PCAOB)...

FASB clarifies an accounting alternative for a financial instrument with an embedded derivative: new flexibility to adopt fair-value measurement.
May 1, 2006... The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards No. 155 (FAS-155), Accounting for Certain Hybrid Financial Instruments--an Amendment of FASB Statements No. 133 and 140. FAS-155 amends...

Patience and communication as workout strategies: good communication gives both lenders and borrowers more flexibility.
May 1, 2006... Sometimes the relationship between lenders, board members and management is seen as adversarial, but it doesn't need to be that way. A consistent flow of information--both good and bad--will help ensure that corporate leaders are taking...

Jay Gould: ruthless scoundrel or misunderstood genius: whether Jay Gould was a robber baron or an industrial statesman is more than just an academic debate among historians.
May 1, 2006... For almost 150 years, Americans have held conflicting views concerning our nation s business leaders. Whether it be 19th-century industrial tycoons such as Andrew Carnegie or John D. Rockefeller, or more contemporary CEOs such as Michael Eisner...