risk-management

Devising a risk mitigation plan Â-- and the training and oversight necessary to implement it Â-- requires lenders and servicers to conduct a scientific investigation into the policies, procedures and controls they already have in place.

Smaller bank holding companies are faced with a potentially significant problem if their risk controls are judged insufficient for the current regulatory environment.

JPMorgan Chase's recent refusal to process payments for a startup condom company highlights why government crackdowns that treat banks as moral police (ahem, Operation Choke Point) should worry everybody.

Risk is like water, seeking the path of least resistance. If the path is narrowed, risk does not necessarily evaporate, as regulators wish, but often focuses as a more concentrated force. Accepting this alternative concept of risk has far-reaching policy consequences.

In most states, the good-faith lending decisions made by bank officers and directors are protected from liability, even if the loans sour and the bank fails. But bankers and directors beware: you can still be sued for simple negligence.