The Impact of Environmental Regulation on Commerical Lending
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Authors
Doshi, Nina S.
Issue Date
1993
Type
Thesis
Language
en_US
Keywords
Alternative Title
Abstract
The Environmental Protection Agency was created to control the toxic
pollutants that were of major concern in the 1970's. They implemented
various laws to control this situation that affected all sectors of society. These
regulations had a large impact on the business environment. One of the
groups that was deeply affected by these laws was the banking industry. This
paper traces those laws that have a direct effect on commercial lending and
how these regulations changed lending policies to reduce environmental
risk.
Section I of this paper provides general information on the commercial
credit environment. In particular it explains the three lending objectives that
the lenders follow before proceeding with a loan. Banks try to provide loans
that are beneficial to the bank, to the customer, and to the community. Low risk
and profitability are the key tools that lenders use in all types of loans.
Section II of this paper examines the various environmental
regulations that affects the banking industry. In particular, Resource
Conservation & Recovery Act (RCRA), the Comprehensive Environmental
Response Compensation & Liability Act (CERCLA), and Superfund
Amendments and Reauthorization Act (SARA) will be carefully analyzed.
Section m explains the impact of these environmental regulations. In
particular, the Fleet Factors Case will be analyzed to show the impact this case
had on the banking industry.
Section IV reviews the recent environmental regulations that provides
some relief for commercial lenders. Michigan's Act 307 is mentioned to
explain the environmental regulations on the state level.
Section V of this paper contains NBD's new lending policies that must
be followed when dealing with loans that may have potential environmental
contamination. These guidelines must be carried through to reduce the
bank's environmental risk.
Section VI shows the costs associated with these environmental
procedures. Various examples are analyzed to show the costs associated with
cleaning up a contaminated site.
Section VII analyzes the effect of these environmental regulations.
This section examines the banker's argument on whether lenders should
provide loans to companies with environmental risk. It also analyzes EPA's
failure on Superfund due to money being wasted on lawsuits instead of
cleaning up contaminated sites.
Section VIII summarizes the impact of environmental regulations on
commercial lending. This section ties the other sections together as it points
out the relevant issues pertaining to environmental regulation.
Section IX reflects my internship at NBD in Benton Harbor. I explain
the tickler system that I created to keep track of the personal financial
statements. I also describe my projects on the environmental requirements
and the loan officer site inspection. I was unable to include the actual projects
in my WESIP as this information is confidential.
Section X is a summary of how my internship at NBD has affected my
future career plans.
Description
v, 70 p.
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U.S. copyright laws protect this material. Commercial use or distribution of this material is not permitted without prior written permission of the copyright holder.