“A check for $602 written to Home Depot had cleared my account,” says Washington, 34. “Someone took my bank routing and account numbers and duplicated my check by sending the information to a mail-order check company. Then the criminal wrote the fraudulent check to Home Depot.”

Washington filed a report with Bank of America, which refunded her money within two days, including overdraft fees.

Approximately 71% of organizations experienced attempted or actual payment fraud in 2010, according to the Association of Financial Professionals. Legislation such as Dodd–Frank,  the CARD Act, and  the Fair Credit Billing Act have been helpful to consumers with credit cards, but the rules undergirding fraud protection remain inadequate for bank cards: The protections for debit cards under the Electronic Fund Transfer Act are much weaker than those for credit cards. “A lost or stolen debit card is typically a much bigger headache (and a more expensive loss for the cardholder) than a lost or stolen credit card,” says Joe Ridout, consumer services manager for Consumer Action, a financial education organization.

It’s important to understand how criminals steal banking information. Many use cell phone-sized devices with a magnetic strip called a skimmer to retrieve data from your bank card. Skimmers can be used at an ATM, gas pump, and even at a restaurant. Hidden cameras and Dumpster diving are other means.

“If you discover that someone has wiped out your bank account, call the bank immediately. Contact anyone who gets automatic payments such as mortgage and insurance companies, to explain that payments may be late or not go through,” advises Justin Pritchard, a certified financial planner and banking expert at About.com. “You may want to get a letter from the bank saying you were a victim of fraud, and provide police reports to anybody you’ve paid late. It could be harmful to your credit if you don’t document the fraud,”  says Pritchard.

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Identity theft begins with access to personal information found on mail, credit cards, identification, and other documents. Leverage online banking and sign up for electronic delivery of information to avoid receiving account statements or canceled checks in the mail. Also be aware of phishing scams where fraudsters send fake correspondence to get you to give out your bank account number.

“Sign up for direct deposit to have paychecks, dividends, tax refunds, and other deposits sent directly to your bank account,” advises Geri Thomas, SVP, Global Diversity and Inclusion Executive and Georgia Market President for Bank of America.

Avoid unfamiliar websites, use a shredder, sign up for e-mail or text alerts from your bank, and place a lock on your mailbox. Also avoid clicking on links saying they’re from your bank. Instead, go to your bank’s website and log in to your account.

“It’s important to protect your debit card because it can be more dangerous than a credit card. Under federal law, credit cards have more protection. If you don’t report a debit card stolen within two days, you can be responsible for $500 in charges. After 60 days, it is unlimited,” cautions Ridout.

To reduce your chances of becoming a victim, be on the lookout for these red flags:

• If you see misspelled words when banking online, or receive a request for your Social Security number when you already have an account. Alert the bank immediately.

• You’re at the ATM and the card swipe looks altered, the machine is not under camera surveillance, or people are lingering around. Leave quickly and report this to bank officials. If you’d like to file criminal charges, you can, but the bank will likely conduct its own investigation. “If you know the person that has stolen from you such as a roommate or relative, you can tip the cops off and file charges. Other than that, I would have the bank handle the investigation,” says Pritchard.

These documents can be useful for tax purposes, as proof of a transaction or payment, or for other reasons. But how long should you keep them? One thing to remember is that federal tax rules require you to have receipts and other records that support items on a return for as long as the IRS can assess you additional tax.

“In very general terms, because the IRS has about six years to assess additional tax if you underreported your income by more than 25 percent, many tax advisors recommend holding all tax records for about seven years, building in extra time for any unforeseen delays in processing your return,” says Rick Cywinski, an FDIC tax policy manager. He also notes that the tax period is unlimited if the IRS suspects fraud.

With tax considerations in mind, here are suggestions.

Credit card and bank account statements: Save those with no tax significance for about a year, but those with tax significance should be saved for seven years.

Canceled checks: Those unrelated to anything you claimed on your income tax form and not needed to show you’ve paid a bill or debt probably can be destroyed after you’ve verified that your bank statement is correct. But canceled checks that support your tax returns, such as charitable contributions or tax payments, probably should be held for seven years.

And, you may want to keep indefinitely any canceled checks and related receipts or documents for a home purchase or sale, renovations or other improvements to a property you own. But once a home has been sold and another seven years have passed, checks related to renovations or improvements can be destroyed.

Of course, many banks no longer send canceled checks, although they may provide copies of the originals. “You can keep the copies of your tax-related checks if you get them from your bank; but if you don’t get copies with your statement, you have some options,” says Evelyn Manley, a Senior Consumer Affairs Specialist at the FDIC. “The most conservative approach is to order copies of important checks soon after your statement arrives,” she says. “Another is to keep the information on your bank statement to order copies if you’re audited in the future because, in general, banks that do not return original checks to customers are required to keep copies of checks for seven years.”

Also, Manley says, if you keep records electronically, be sure to back up your data. You can store it in various ways (on CDs, flash drives), but as old technology is no longer supported, you may need to transfer your data to new media. Another option is to research companies that provide backup storage online (or in “the cloud”). These services are usually provided free or for a small charge.

Deposit, ATM, credit card and debit card receipts: Save them until the transaction appears on your statement and you’ve verified that the information is accurate. You may make an exception for receipts for expensive items. If they are under warranty or you have to file an insurance claim, the receipt may be helpful.

Finally, before tossing away any document that contains a Social Security number, bank account number or other personal information (especially financial information), shred it to avoid becoming a victim of identity theft.

For additional guidance on what records to toss and when, ask your accountant, attorney or another trusted advisor.

Source: FDIC Consumer News

No wallet, no problem (Image: ThinkStock)

Here are four safety tips from FDIC Consumer News that can greatly reduce the chances of becoming a victim in the event your wallet is lost or stolen.

•Limit the amount of confidential information in your wallet. Only carry the identification, checks, credit cards or debit/ATM cards you really need. The rest, including bank account numbers, personal identification numbers (PINs), passwords, and most importantly, Social Security cards, are best kept elsewhere in a safe place. Likewise, don’t pre-print your Social Security number or driver’s license number on your checks, because either one could help a thief apply for a loan, credit card or bank account in your name.

•Keep good backup information about your bank and credit card accounts. You’ll want account numbers and phone numbers that can be used to report your losses or request new cards. “Some people make copies of the front and back of all the cards or important notes in their wallet to help jog their memory,” says FDIC Regional Ombudsman Janet Kincaid.

•Review your credit card bills and your checking account statements as soon as they arrive. Make sure that no fraudulent activity is taking place. Periodically request your credit reports. Look for signs that someone may have obtained loans or tried to commit other fraud in your name. By federal law, you are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit bureaus—Equifax, Experian and TransUnion. Go to http://www.AnnualCreditReport.com or call toll-free 1-877-322-8228 to order your free credit reports.

•If you’ve already been victimized, take steps to limit your liability. Immediately call your bank (to report a lost debit/ATM card) and your credit card companies. And if you spot an unauthorized charge on your credit card, you must follow up on any phone calls to your card issuer with a letter disputing the transaction. “Under the Fair Credit Billing Act, you must dispute unauthorized charges appearing on your credit card statement in writing within 60 days after it was sent to you,” notes Joni Creamean, Chief of the FDIC’s Consumer Response Center. “The letter also must be sent to the bank’s designated address for billing inquiries, not to where you’d mail your payments.”

Source: FDIC Consumer News

Kim Kardashian gets declined.

What a difference a month makes. Prior to the November 10 launch of their prepaid debit “Kard,” the Kardashian sisters (Kim, Khloe and Kourtney) were bursting with excitement about their latest business deal with Mobile Resource Card and MasterCard. “There are so many more amazing features to this card and I’m so excited to share it with you guys,” Kim wrote on her blog. “I think you guys are going to love it!”

Attorney General of Connecticut Richard Blumenthal had more suspicions than love, and opened an investigation to determine if the Kardashian Kard violates consumer protection laws. In a letter sent to the University National Bank, Blumenthal charged that the “egregious fees [for the Kard] raise considerable ethical, and perhaps legal, questions under Connecticut’s consumer laws. The new federal Dodd-Frank Act also prohibits ‘abusive’ financial products being sold to consumers.”

In the wake of the controversy, which included financial gurus like Suze Orman sounding off on the potential negative impact of the card, the socialites released a notice of termination to the backers of the Kard last night (November 29, 2010). “[The Kardashians] have been successful… because they are recognized as honest, ethical and fun-loving individuals who are kind and caring to others,” the Kardashians’ lawyer, Dennis A. Roach, wrote in a statement. “Unfortunately, the negative spotlight turned on the Kardashians as a result of the Attorney General’s comments and actions threatens everything for which they have worked.”

At the root of the problem were a host of hidden fees and extra charges that would likely cause more harm than good to cardholders. Not only did it cost a reported $99.95 just to own the Kardashian Kard, there were monthly fees totaling $7.95, as well as a $1.50 surcharge every time money is added to the account and a $25 replacement charge for lost or stolen cards.

Targeting those with poor credit histories or none at all, prepaid debit cards may sound like a godsend, but the compounding charges can be crippling. Secured cards, which require a cash collateral deposit, are generally better options for those unable to secure an account with a reputable financial institution or trying to rebuild their credit score following a bankruptcy claim, but they have just as many financial pitfalls. “As a consumer you really need to do an investigation into the charges—membership fees, annual fees and there are even charges for replenishing the card, so you get charged money to put money on the card,” warns John Simons, Black Enterprise’s Editorial Director & Senior Personal Finance Editor. “In this economy, banks are trying to get money any way they can.”

Before making the decision to sign up for a secured or prepaid card, which are disproportionately marketed to our communities, be sure to ask yourself these 10 questions first.  Bank smart, BE smarter.

Read more on how to avoid financial pitfalls…

• Lil Wayne’s Young Money to Debut Prepaid Credit Card
• Money Expert Q&A: How to Have Perfect Credit
• Smart money moves at every stage of life

The Young Money pre-paid debit card

Young Money is all about the cash. Your cash. While it’s not unusual for artists to parlay their success into other ventures, this hip hop super group–led by Grammy-award-winning rapper Lil Wayne and breakout stars Drake and Nicki Minaj–plans to cash in on those struggling to build credit. According to reports, the group is releasing a pre-paid debit and credit card. Mack Maine, president of Young Money, told blogger Karen Civil, that “it’s just pretty much a Young Money card and then we’ll branch out to like Nicki Minaj pink cards, maybe having Wayne and Drake cards being like the black cards…Maybe have Twist and Chuckee for the younger crowd.”

While this may be a lucrative deal for the popular Young Money crew, this could spell disaster for your wallet if you’re not educated about how these cards work . Details about the Young Money card are still being worked out, so I’ll refrain from conclusive statements about them and how they’re preying on the disadvantages of those in our community who financial institutions may consider “unbankable.”  But I will dive into why prepaid cards, in general, can be hazardous to your financial health. The fees from many of these cards can add up to hundreds, if not thousands, of dollars over the years. (Ryan Mack, CEO of Optimum Capital Management, recently penned a telling blog opposing Russell Simmon’s Rush Card on Huffington Post to ilustrate this same point.)

So before you sign up with Young Money or any other prepaid cards, here’s an example of fees associated with cards like these.

Rushcard vs. Typical Bank Card

Activation Fee: Rushcard = $19.95, Typical Bank Card = Free
Convenience Fee: Rushcard = $1.00, Typical Bank Card = Free
ATM Cash Withdrawal: Rushcard = $1.95, Typical Bank Card = Free (at Branch)
ATM Balance Inquiry: Rushcard = $.50, Typical Bank Card = Free
Bill Payment: Rushcard = $1.00, Typical Bank Card = Free
Inactivity: Rushcard = $2.95, Typical Bank Card = Free
Refund of Rushcard/Bank Card via Check: Rushcard = $5.00, Typical Bank Card=Free

Prepaid cards are usually marketed towards those with no credit history, bad banking history or lacking access to financial institutions. Sure, Young Money and others may spin this as financial empowerment, but the truth is, many of the patrons who use these cards lack of financial understanding to begin with–and unfortunately these individuals disproportionately tend to be in poorer neighborhoods. Prepaid cards do not help the “unbankable” establish or rebuild credit; instead it creates a cycle hello-payday loans and check cashing spots.

Click here for tips on how you can rebuild your credit.

Tell us what you think: Have you ever used a prepaid debit card? What message do you think Young Money’s prepaid card sends to young people? What are alternatives you would use for a prepaid card?

Among those painfully aware of this is Chaka M. Patterson, vice president and treasurer of Exelon Corp., one of the nation’s largest electric companies with $17.3 billion in annual revenues. He helped developed Exelon’s supplier diversity program that includes a $67 million revolving credit facility with minority-owned banks such as City National Bank of New Jersey (No. 5 on the BE Banks list with $473.3 million in assets) and Legacy Bank (No. 13 on the BE Banks list with $230.9 million in assets).

Editorial Director Alan Hughes caught up with Patterson, 41, at the 2010 Marathon Club DealMakers Summit in Chicago. Here’s what he had to say:

One of the reasons large corporations give for not doing business with minority businesses is that they’re just too small. Is that real?

No, it’s not real. I think it’s complete and utter nonsense. All of these [minority] banks are big enough that they have high-quality, highly talented people to get the work done.

What is it going to take for corporations to really get it right?

If politicians and regulators are held accountable by people who look like us then they in turn will hold companies like mine accountable. For example, we do a merger or acquisition and have a large presence in Illinois and Pennsylvania. If regulators in those two states said, “One of the criteria we’re looking at is how much money you are spending with businesses owned by people of color in connection with this transaction.” And if they don’t like the number, maybe they won’t approve it. So it takes a multi-pronged approach. You have to have a more diverse pool of senior executives and board members. You have to have the political pressure and the education has to be there for the constant pipeline of potential executives.

What else is needed?

Let’s create sizeable entities that can grow into an enormous institution. So I think the final leg to that stool would be some consolidation among some of the minority-owned investment banks. If you could put together the top three or four into one shop they’d be very powerful and get a lot more business because it takes the size issue off the table.

But we tend not to do business or merge with each other. Some have the mindset of rather owning 100% of a $10 million company than 50% of a $30 million company.

I don’t understand that because that $30 million company can grow into a $100 million company.  Among minority-owned investment banks, Christopher Williams (CEO of Williams Capital Group LP) has done a pretty good job. He got a piece of (former BE 100s investment bank Utendahl Capital Partners) when Utendahl decided to exit a business. So at least with investment banks there’s some thinking around a way to do more than just work together but actually merge. On the asset manager side, it’s a no-brainer. You can’t be a $100 million, $500 million or even a $1 billion fund.  It’s just too small. We have concentration limits so even if Exelon wanted to do a big allocation with someone, we’d be half the fund. I’d love to see some of these asset managers get together so big corporations can give them big allocations.

BOA’s new debit card policy will kick in mid-June for new customers and August for existing cardholders. So instead of being charged $40 for that $6.99 BLT you thought you could cover, you simply won’t be able to make the purchase –rejected on site! Hey, it beats having to come up with extra cash ‘cause you wanted a sandwich.

Banks raked in $38.5 billion from overdraft and insufficient fund fees in 2009.  Debit purchases account for roughly 60% of BOA’s overdrafts.

“What our customers kept telling me is ‘just don’t let me spend money that I don’t have,” said Susan Faulkner, the bank’s deposit and card product executive, who says the change in policy is part of a broader push to build trust among BOA customers. “We wanted to help them avoid those unexpected overdraft fees.”

In the months leading up to the implementation of the White House’s CARD Act, many banks became unscrupulous, hiking fees and lowering credit limits. Perhaps our bailed out brethren on Wall St. have finally had a change of heart? Only time will tell.

Either way, the policy is long overdue. Automatically giving customers overdraft protection, where purchases are cleared while they continue to spend and rack up exorbitant fees, made no sense to anyone but the banks. Sure, as consumers we must also do our part and keep track of our spending, but how hard is it to decline a purchase when funds are not available? This move will undoubtedly put money back into consumers’ pockets, and the sheer embarrassment of having a purchase declined at a grocery store or on a weekend shopping spree is enough to keep even the most haphazard spenders on their toes.

What’s your opinion? Do you think other banks will follow suit? Do you think the absence of this revenue stream means additional fees elsewhere?

Renita Burns is a staff writer at Black Enterprise.

(Photo by Glenn Triest)

For more than three decades, Donald Davis played the six string, performing on an array of hits for the old Motown and Stax record labels. In fact, his guitar can be heard on Motown’s first hit single, “Money (That’s What I Want).” Some 50 years later, the 71-year-old Davis—now chairman and CEO of Detroit-based First Independence Bank (No. 15  on the B.E. Banks list with $161.1 million in assets)—has discovered a bold new beat. The three-time Grammy winner is banking on declining real estate values to be the bridge to greater profitability for his financial institution.

You’re probably wondering how a banker in  the region perhaps most devastated by the U.S. housing slump could feel at all optimistic about the real estate market, particularly in light of eroded valuations, increased banking regulation, a decline in credit markets, and an overall slump in the financial services sector. The answer: He has found the upside in sliding home prices. The Detroit area is seeing homes being unloaded at fire-sale prices. In 2009, the median sale price for a nonforeclosed home in the city was a meager $15,405, according to Realcomp, a Michigan-based provider of multiple listing services; the median sale price in Wayne County, which includes Detroit, reached only $85,929. By comparison, the median sale price nationwide, according to the National Association of Realtors, was $173,200.

Declining housing values have left thousands of homeowners facing a dilemma. Those carrying a $300,000 mortgage on a home now valued at $200,000 must have the mortgage agreement rewritten, or continue to pay the current mortgage despite the lower valuation, or give up the house. If the home is relinquished, it will be sold at a lower price and the new buyer will either purchase it at a short sale or buy it out of foreclosure at a reduced price. That’s the market Davis is looking to tap. To achieve that end, in November, First Independence paid $750,000 to acquire the mortgage business of Warren, Michigan-based Warren Bank, shut down last year by the Michigan Office of Financial and Insurance Regulation.

Davis plans to focus on moderately priced home mortgages—an area of increased activity due to the federal government’s stimulus efforts as well as people looking to purchase a home on the cheap. According to Davis, the business—now Independence Mortgage Co., or IMCO—had some 450 mortgage applications as of January. “And now we’re clipping at around $15 million in volume a month, which is the largest I’d say for a black mortgage company out here today. We truly intend to be somewhere around $35 million a month by spring when all our operations are running properly.” The more than $50 million in income IMCO had generated as of January has been music to Davis’ ears.

But he concedes that the downturn eliminated his weaker competitors, enabling his five-branch bank to acquire their assets at a low cost while holding on to the $3.2 million in funds the bank received last year from the Troubled Asset Relief Program, better known as TARP. First Independence also remained relatively untouched by subprime-related toxicity, placing it in a favorable position to make loans during the credit crunch as well as seek out more branch acquisitions.

Risky Business
Last year was among the most brutal for banks of all sizes in more than a generation, with 140 institutions failing, two of them black-owned. And this year promises a continuation of this punishing environment as risk-averse lending institutions keep purse strings tight. In December, President Barack Obama and Treasury Secretary Timothy Geithner were among government officials who met with community bankers to increase lending to small businesses and to support a revision of financial regulations. The government wants money flowing from banks to homeowners and businesses to jolt the economy, but community banks contend that heightened regulation combined with low interest rates (and therefore low profitability) make them reluctant to take on additional risk.

“Examiners are coming in and saying those loans you made a few years ago, the value of the property is down so you have to write down the value of the loan. That’s even if the loan is being paid,” maintains Steve Verdier, executive vice president and director of Congressional Relations Group for the Washington, D.C.-based Independent Community Bankers of America, a community bank advocacy group with nearly 5,000 members. “The underlying collateral has lost value and you can be forced to write the loan down or off even if it’s being paid. So the economic environment and the regulatory environment are militating against what the president and other people would really like the banks to do.”

Recovery Mode
While the Obama administration urges banks to increase small business lending, Verdier contends that qualified businesses are few and far between. He claims that while the economy remains uncertain many businesses are cautious about taking on additional debt to expand, hire personnel, or make acquisitions. “Those kinds of marginal calculations have an impact on banks that service those small businesses.” But the good news is, as the economy continues to recover there will be increased demand for business loans.

In the meantime, the decline in valuations has created a demand from consumers looking to purchase undervalued properties. “The real estate market is a tale of two cities. It’s looked at unfavorably right now because of the meltdown and the valuations of people’s mortgages, but it’s looked at favorably because there’s so much stimulus money chasing it,” says Davis. “Our mortgage company is poised to tap into that. We do commercial lending as well, but our emphasis now is in the retail mortgage business because that’s where the dollars are.” Davis says the sweet spot is low- to moderate-income houses and first-time homebuyers.

The economic climate also made it a buyers’ market for lending institutions with available cash reserves—particularly those with TARP funds. “We made tremendous strides acquiring distressed assets. When a bank is being liquidated, a customer has to be moved and we’ll ‘buy’ that customer,” says Davis. “So we’ve done $15 million or so in the last quarter.”

Banking on Real Estate
Davis’ advantage is residential mortgage loans. While cautious lending institutions eye each application warily, properties are still being sold. “It may not be as fast as people like but it is happening,” says Verdier. “Banking is a risk-taking activity and if banks don’t take risks then the economy do esn’t grow. It’s as simple as that.”
First Independence should realize a growth in assets to about $175 million as it continues its expansion plans, according to Davis. In addition to the mortgage business, the bank opened its fifth location last year in Farmington Hills, Michigan. “We look to get a couple new branches as we seek choice branches closed down via liquidation,” predicts Davis. “So we’ll go after them to capture the deposits there.”

Expect First Independence to continue being acquisitive. According to Davis, Michigan has targeted more than a dozen banks for closure, and as these banks are liquidated solid assets will be sold for dimes on the dollar. “Those are opportunities for banks like ours to cherry-pick the loans that we want to take over. There’s a lot of opportunity for banks that have the capital.”

Davis isn’t sure that the worst of the financial crisis is over, but he believes there are bright spots to be seen now and in the future. Other insiders agree. “I think for the vast majority of community banks, the prognosis is relatively favorable,” says Verdier. “The condition is stable, but the patient needs continued care and watching. Some of those patients won’t make it but the vast majority took their vaccine in the boom time and maintained high capital, and they will survive as a result of that foresight.”

Davis plans for First Independence to keep playing its sweet song of profitability for years to come.

This article originally appeared in the March 2010 issue of Black Enterprise magazine.

—C. Jones
Via E-mail

First off: You’re not alone. Right now, according   to Zillow.com, nearly a quarter of U.S. mortgage-holders are “underwater,” meaning their homes are worth less than they borrowed from the bank. Many of those homeowners, like you, purchased at (or near) the height of the housing bubble in 2006.

If you like where you live, and can still afford your payments, your best option is to continue paying your mortgage and ignore the current market trends. Tara-Nicholle Nelson, real estate broker and author of The Savvy Woman’s Homebuying Handbook (Prosperity Way Press; $24.95), agrees. “Reset your mindset,” says Nelson. “Forget the idea that you have to do anything. Depending on where you live, if you plan to be in your home for five years or longer, you could see your value rebound.” The reason most real estate experts offer this advice? There are few palatable alternatives.

You might ask your bank to modify your loan by reducing the principle, but banks don’t often agree to these kinds of modifications. “That works in about 1% of cases,” says Nelson. Another option: you might ask the bank if they’ll consider allowing you to put the house on the market as a short sale property. The problem: your credit score will take a hit, and the bank may come after you later to pay the portion of the sale that fell “short” of what you owe them. The other option, if you can call it that, is to let the house slip into foreclosure. No one wants that, for obvious reasons.

This article originally appeared in the January 2010 issue of Black Enterprise magazine.

After 23 consecutive days of debate and clearing key procedural votes, the Senate is set to take a final vote on its $871 billion healthcare bill at 8 a.m. on Thursday, before dashing back home for Christmas. President Barack Obama said he would not begin his Hawaii vacation until the vote has taken place.

“I will not leave until my friends in the Senate have completed their work,” Obama said. “My attitude is that if they’re making these sacrifices to provide health care to all Americans, then the least I can do is be around to provide them any encouragement and last-minute help where necessary. That’s the deal.”

Democrats passed a crucial milestone on Monday when they successfully garnered the 60 votes needed to curtail further debate on the bill, effectively ending Republicans’ efforts to filibuster. In addition, the AARP and the American Medical Association launched a joint advertisement in support of the bill.

According to Senate Majority Leader Harry Reid (Nebraska), the bill would reduce the federal deficit by $132 billion in the first ten years and expand coverage to more than 31 million people who are currently uninsured.

Republicans, however, are furious, charging that it would do the opposite and that Democrats have been able to force the bill forward only by making backroom deals and making moves in the dead of night. RNC Chairman Michael Steele said the whole process was akin to Democrats “flipping a bird to the American people.”

Republican senators are feeling particularly sour about the sweet deal that Sen. Ben Nelson (D-Nebraska) made in exchange for his vote, which would exempt his state from paying for its share of federal Medicaid funds in perpetuity. But according to Reid, such deals represent “the art of compromise.”

“I don’t know if there’s a senator that doesn’t have something in this bill that was important to them,” he said. “And if they don’t have something in it important to them, then it doesn’t speak well of them.”

Obama Urges Small Banks to Lend to Small Businesses

President Barack Obama met with a dozen community bankers on Tuesday and essentially delivered the same message he gave “fat cat” bankers a week ago: Make more small business loans.

“There are businesses that are looking for loans out there, that are profitable and ready to make money, and the key is to match them up with banks that are in a position to lend,” Obama said. In

remarks to reporters after the meeting, the president said that most community banks weren’t engaged in the risky activities that led to the financial crisis, but “in some ways the pendulum may have swung too far in the direction of not lending after a decade in which it had gone way too far in the direction of getting money out of the door no matter the risk.”

Deborah C. Wright, president of Carver Federal Savings Bank (No. 1 on the BE 100s bank list), says that her bank’s Carver’s federal regulator now requires the bank to hold more capital to pledge against total loans made and it has been discouraging lending in some areas, such as commercial real estate. She also said that the bankers at the meeting all expressed concern about the “unintended consequences” of regulatory reform on their institutions.

“Small banks are deeply concerned that a ‘one size fits all system’ will inevitably hurt smaller players,” said Wright, adding that “The cost of complying with regulations, was brought up today by every banker.” Administration officials who attended the meeting, including Treasury Secretary Tim Geithner and SBA administrator Karen Mills, have been charged with following up on these and other concerns raised by the bankers.

Speaking to reporters, Obama said, “I think, fairly, they just want to make sure that as we regulate better, that that doesn’t automatically mean that we’re just loading them up with more paperwork and more burdens. And I think we do have an obligation to make sure that the regulatory schemes that we come up with are more streamlined and more efficient and send clear signals to the banks involved.”