The Senate has acknowledged that the federal banking regulators are sending mixed messages to community banks… but they don’t plan to do anything about it. Section 4113 of the bill to authorize the Small Business Lending Fund adopted by the Senate on September 16, 2010 includes a declaration of Congress regarding the messages being sent by the federal banking regulators.
Sec. 4113. Sense of Congress
It is the sense of Congress that the Federal Deposit Insurance Corporation and other bank regulators are sending mixed messages to banks regarding regulatory capital requirements and lending standards, which is a contributing cause of decreased small business lending and increased regulatory uncertainty at community banks.
Apparently, the Senate doesn’t have any issues with the regulators’ actions, since the bill neither states that Congress believes the regulators are wrong for sending these mixed messages nor includes any requirement that they stop doing so. One might suggest that the regulators are not sending mixed messages… but are sending different messages depending on the audience; the regulators are telling Congress they want banks to lend, while imposing burdens on banks that make new lending practically impossible.