Community banks ‘safe and sound’
Many varying opinions exist on the current state of the economy. Some experts say the economy is destined for a recession, others say the nation is already in a recession, and a few say another Great Depression is just around the corner. Others say the economy is strong but is in a down-turn that will soon recover.
With a $700 billion plan designed to get credit markets working normal again on the tables on Capitol Hill, one has to wonder how local banks will be affected if the plan is not passed or if local banks are related to the investment bank problems at the federal level. The first attempt to pass the legislation failed Monday afternoon, sending the Dow Jones industrials plunging 778 points, the most ever for a single day.
First Harrison Bank President Sam Uhl, along with the Independent Community Bankers of America (ICBA), believes the troubles on Wall Street will not result in trouble on Main Street as far as community banks are concerned.
‘Our customers may be watching the news and reading the papers and, naturally, they worry about their own banks,’ said Uhl. ‘We understand their concern but want to reassure our customers that they need not worry about the stability of their bank and the safety of their money.’
According to a release from the ICBA, the investment banks getting so much attention for their struggles lately are not commercial banks or savings institutions.
‘The reality is there are more than 8,400 commercial banks in our country and insured deposits are safe in an FDIC-insured institution,’ said Cynthia L. Blankenship, ICBA chairman. ‘No depositor has ever lost a penny of FDIC-insured funds. Investment banks are not FDIC insured.’
Deposits held in FDIC-insured community banks are insured for up to $100,000 per depositor and $250,000 for certain retirement accounts.
‘The community banks have no worry whatsoever,’ said Uhl. ‘We’re very safe and sound. We’ll be here 100 years from now.’
Uhl said he encourages customers to call if they are concerned.
‘We value our relationship with our customers and our communities, and we want everyone to feel secure both now and well into the future,’ he said.
Uhl said his bank did not invest in sub-prime mortgages, the cause of the investment crisis.
Blankenship said community banks have been and continue to be some of the safest, soundest and most secure financial institutions in the country.
The ICBA released a statement Monday expressing its disappointment with the U.S. House of Representatives for rejecting the emergency legislation.
In a release, Camden R. Fine, president and CEO of ICBA, said the legislation is needed to help community banks get Main Street back on its feet.
‘Community banks did not cause the crisis but are determined to do everything possible to help return economic stability to our country and our communities,’ Fine said in the release. ‘This bill was not just about Wall Street; it’s about helping Main Street and the people and towns throughout America.’
President George Bush urged Congress to come up with a workable deal by today (Wednesday) or tomorrow. The Emergency Economic Stabilization Act of 2008, H.R. 3997, failed Monday with a vote of 205-228; 140 Democrats and 65 Republicans voted in favor of the bailout, while 95 Democrats and 133 Republicans voted against. The measure needed 218 votes to pass.