De-risking sounds great from a shareholder and regulatory point of view, but when push comes to shove, there will be losers.

In the case of Bank of America's push to reduce risks, the losers seem to be small business debtors. The Los Angeles Times reports that Bank of America "is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had. Business owners complain that Bank of America's credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can't seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans."

Bank of America says the new policies only affect a small number of businesses, and you do have to appreciate the challenging position the bank is in. It is under extreme pressure to limit lending losses. In a poor economy, that often means rationalizing credit risks.

This is going on at other banks as well. Process is critical in these endeavors, and Bank of America says it notified affected customers of the changes a year in advance. It would help if the criteria were more transparent. Some affected customers told the Times they may be forced out of business.

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