Area Banks Not Ailing, Officials Say
Friday, 03 October, 2008
Financial leaders support bailout bill
Community and regional bankers say Wall Street's financial troubles are on East Texans' minds, but local banks aren't seeing the same problems ailing other institutions.
Local banks are less involved in the home mortgage investment market, allowing them to escape much of the sub prime mortgage free fall, according to Jeff Austin, president of Austin Bank. Mortgage-backed securities make up less than 6 percent of total assets at East Texas-headquartered banks such as Texas Bank and Trust, Spring Hill State Bank, White Oak State Bank and Austin Bank.
"The old commercial bank model is the one that has withstood the test of time and has been the soundest model, rather than the business bank," Austin said. He and Texas Bank and Trust President and Chief Operating Officer Rogers Pope Jr. were in the state capital Thursday for the Texas Bankers Association board of directors meeting.
"We haven't participated in sub prime lending," Austin said of his bank.
Investments in securities backed by bundled sub prime loans have contributed to problems for large investment banks. Those problems have helped make credit more difficult to obtain around the country.
Troy W. Moore, community bank president at Bancorp South’s H.G. Mosley Parkway branch, said some customers have asked employees about the bank's strength and its Federal Deposit Insurance Corp. insurance. Nothing has changed here despite national economic news, mostly because of Bancorp South’s focus on local branches making local decisions, he said.
"Fortunately, I think the banks in East Texas are doing well," Moore said. "We're a strong, well-managed bank."
The TBA board of directors adopted resolutions Thursday that support existing regulations for federal and state-chartered financial institutions and urge the passage of the 2008 Emergency Economic Stabilization Act. The act, which includes up to $700 billion in money for the federal government to purchase mortgage-backed securities from faltering financial institutions, is scheduled for a vote today in the U.S. House.
Austin is a TBA board member, while Pope serves on the association's government relations council.
"While the board recognizes that this legislation is neither ideal, nor particularly welcome, we recognize that congressional action is needed in order to calm the current market crisis," the directors said in a prepared statement.
In a 74-25 vote Wednesday, the U.S. Senate passed the economic stabilization package that includes a temporary increase in the per-account deposit insurance limit to $250,000 through Dec. 31, 2009. The bill also could extend some expired business tax breaks.
"I think everyone agrees we need to do something," Austin said. "I agree with the free market enterprise line of thinking to let things work, but there are times for extraordinary measures to prop up the economy, so all of us on Main Street can loan money."
Austin said inaction by House members has placed fear in many consumers. He expressed disappointment in comments made earlier this week by U.S. Rep. Louie Gohmert, R-Tyler.
Gohmert said Thursday that he joined House opposition in defeating the plan after his office fielded letters and calls from East Texans who were overwhelming against the bill. Since that vote, East Texans' letters and calls have been in support of the plan to let the U.S. Treasury secretary give money to financial institutions that hold bad debt, Gohmert said, adding that he still was leaning against a revised bill.
Meanwhile, at least one car dealer said his auto sales haven't been affected by the problems that have made credit more difficult to get.
Scott Brothers, general manager of Gorman-McCracken Volkswagen, said his dealership sold four fewer cars in September than the same month in 2007. He said he believes Gorman-McCracken would have surpassed September 2007 if not for Tropical Storm Ike's effect on traffic for four days earlier this month.
"Traffic-wise, I definitely can't associate it with (the financial crisis)," Brothers said. "We haven't seen a change in programs, especially from prime (credit) programs."
Source: http://www.news-journal.com/6
