Why this loan may potentially get your bank in to difficulty

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Suppose that you are the president of a small commericial bank, you recently hired a new loan officer with little experience. Your bank is" loaned up" in other words you have no excess reserves. Y our new loan officer comes to you very excited and explains that one of your customers has just deposited $5,000 in the bank, so he just approved a car loan for another customer who was at his desk when the new deposit was made. The loan was for $5,000. Explain why this loan may potentially get your bank in to difficulty.

Reference no: EM131565965

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