Local financial institutions reassured customers this week that their money is safe as a crisis caused by foreclosed mortgages and bankrupt businesses rattled the industry.
The situation has caused Congress to debate a $700 billion bailout of failing banks and businesses, but area banks and credit unions remain confident.
‘It really hasn’t had an effect on us,? said Lon Bone, vice-president of marketing for T & C Federal Credit Union. ‘We’re still getting loan requests, we haven’t tightened up on credit. We never did the type of loans that got some investment brokers and mortgage companies into trouble.?
Bone said people need to remember that banks and credit unions didn’t create the problem and if a person has more than $100,000, they need to make sure their money is insured properly.
Like T & C, the Clarkston Brandon Community Credit Union is continuing to offer loans the same as before the crisis.
‘While some institutions have made borrowing extremely difficult, we still look at each loan one at a time, just like we have always done,? said CBCCU President and Chief Executive Officer Donna Bullard. ‘Members can take comfort in knowing that their money is safe and secure. CBCCU was never part of the sub-prime mortgage problem. We don’t make exotic mortgages and we are very well capitalized, unlike the institutions you are currently reading about.?
Chase is one of the strongest, most well-capitalized banks in the nation, said Mary Kay Bean, a media relations spokesperson for the corporation with $2 trillion in assets.
‘We are dedicated to being there for our customers, especially during challenging times,? she said.
Oxford Bank has implemented new strategies to deal with the current economic crisis, strengthening loan policies and oversight, decreasing individual loan authorities as well as the size of the bank, making changes in management, and creating new ‘risk? management reports to help with oversight.
‘Management and the board continue to do those things necessary to sell the numerous homes that are now owned by the bank, while maintaining strong capital and liquidity levels,? said Oxford Bank Chairman, President and CEO Jeffrey Davidson. ‘Without question, we have raised the bar on qualifying applicants for new loans.?
Davidson notes the bank is working with homeowners who are struggling to pay their mortgages for legitimate reasons, including being displaced from or changing jobs, or having a reduced income due to downsizing, or going from two incomes to one.
Oxford Bank is currently not doing speculative construction lending or indirect vehicle lending, but will do construction loans for qualified ‘to be occupied? housing and business facilities.
‘We are not out of the lending business, but like most banks, we are more focused on keeping current loans from failing, as opposed to seeing much new loan demand due to economic conditions,? Davidson said.
On Wednesday, the U.S. Senate passed, by a 74-25 vote, a revised bailout package with billions in taxcuts, sending it back to the House, which voted down an earlier proposal on Monday, causing the stock market to plunge more than 700 points.
Bone says the government has to intervene in some fashion. He blamed shady lenders and a breakdown of education for the consumer for the current turmoil, and said companies were putting people into mortgages they couldn’t afford. While the lenders were considering their own short-term profits, the consumers were looking at short-term rates, instead of what they would be paying long-term.
‘People were lending to people who should have never gotten a loan or mortgage to begin with and didn’t understand what they were getting into,? he said. ‘Now, the government needs to make sure they’re helping the consumer, and not just people who made bad investment decisions. They need to take a look at the people who are losing their homes and why. If it was a mortgage from day one they couldn’t take care of, they need to take care of the individual, not necessarily the broker or whoever is holding the mortgage…Unfortunately, some brokers weren’t worried about the person on the other side of the desk.?