The story "Jumping into the credit gaps" (Finance, Oct. 19) states that banks are shy of making loans and other lenders are filling the gap. You would be loan-shy, too, if:
-- Regulators were superaggressive in forcing you to write off loans against scarce capital, out of fear of having another savings and loan debacle.
-- You could do far better in making investments than loans, because they had low or no capital-backing requirements.
-- Borrowers still looked upon the banker as an easy mark and hesitated to accept the requirement that they place some of their own money at risk in the venture.
-- Bankruptcy and foreclosure statutes and interpretations made it difficult and time-consuming for banks to get their money back in cases of default.
-- Nonbank competitors in the loan market could undercut rates because they had no reserve requirements or Community Reinvestment Act requirements to meet.
Paul S. Nadler
Professor of Finance