Bankers take credit crisis in stride: Colorado banks have capital to lend for business customers - but it won't be business as usual.

• Author: Rundles, Jeff

"Neither a borrower nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry."

--Lord Polonius, Hamlet, 1603

It seems the world is taking Polonius' advice, either through personal prudence, lack of availability, or regulatory intervention. But after years of profligacy on both the borrowing and lending sides - and exponential momentum on each side feeding the other - one thing is clear to Colorado bank observers and bankers themselves: Economic recovery will require a fully operating credit system.

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Make no mistake, however: A fully operating credit system in the future, and in particular the near-term future, will look nothing like the disaster-in-the-making system that has driven both Wall Street and Main Street over the last several years. What almost everyone is now calling the worst economic crisis since the Great Depression nearly 80 years ago has forced a kind of fiscal discipline on business lenders and borrowers alike not seen in ages, and before the recovery can take place there is much work to be done.

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"What was OK a year ago is not OK. now," says Denver-based bank consultant Larry Martin, principal of the firm Bank Strategies LLC. "The (banking) regulators are doing CYA right now, and everybody is having issues. If they make loans, they have issues."

Martin adds that he heard the best admonition for these times at a recent banking symposium where a presenting banking executive told his colleagues, "You all have been lenders for the past several years; now you're going to become bankers."

"It's time to think inside the box," adds C. Randel Lewis, managing partner of Denver-based Cloyses Partners, which is a troubled-company consultant, turnaround specialist and interim management firm. Lewis is also an adjusting professor at the Daniels College of Business at the University of Denver where he teaches Strategic Finance in the MBA program. "The days of constant borrowing are over; it's time to buckle down and make your customers pay."

BUSINESS CREDIT AVAILABLE

The hard part is in becoming bankers: managing capital and liquidity, shoring up loan underwriting procedures, working harder with customers on their own capital and liquidity issues.

But in spite of an economic atmosphere replete with commercial and investment bank failures on a level not seen in decades, the capital infusion into the American financial system of something approaching three-quarters of a trillion dollars by the U.S. Treasury, and with governments around the world propping up their own financial structures with billions of their own currencies, the news isn't all bad for Colorado businesses needing corporate finance through bank borrowing. Many of Colorado's leading banks heavily involved in business lending report that their balance sheets are strong, their institutions safe and sound, and that there is money to lend - to the right partners.

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"We are making loans," says John Ikard, president and CEO of Lake-wood-based FirstBank Holding Co. "It's actually a good time to be making commercial loans because a lot of competitors are out of the market."

"We continue to make loans," adds Bruce Alexander, president and CEO of Denver's VectraBank, part of Utah-based Zions Bancorp. "We're being careful and prudent. It's a funny thing: While we (banks) are very competitive, we are the grease of the economy. If we're not making loans, things don't happen."

"My message to the business...