Why this loan may potentially get your bank inot difficulty

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Reference no: EM132014134

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.

Your 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 inot difficulty.

Reference no: EM132014134

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