Banking Law

This article pretty much confirms my recent experience, limited though it may be.

Small, local banks like Cardinal have largely avoided the problems larger banks face from the subprime meltdown.

Most community banks in the Washington region generally don't rely just on residential real estate mortgages for profits. They are not writing off nearly as many loans as their bigger counterparts who bet big on the housing market.

[...]

Community banks -- unlike large banks that often hold loans on their books -- typically sell the loans they underwrite to other banks and investors, which makes them less vulnerable to economic downturns.

Well, "makes them less vulnerable" unless they've done a poor job of underwriting and are forced to buy back the loans by "other banks and investors" who bought what they sold. Apparently, no such community banks were discovered by the writers of this this article.

There's an interesting twist in the story on the old adage "timing is everything."

New banks that opened in the midst of the housing industry collapse have been able to avoid the mistakes that others made. "We were able to learn" from seeing other banks plunge deep into subprime and get burned by that decision, said John Brough, president and CEO of McLean-based Chain Bridge Bank, which opened in August and doesn't deal in subprime.

As a young nephew always advises me, "Dude! It's way better to be lucky than smart."