By Don Bolding

Killeen Daily Herald

Local financial leaders Tuesday reported seeing no ripple effects from the current Wall Street woes damaging financial institutions here, and a veteran certified financial planner advised anyone with a beleaguered portfolio to get to a financial adviser now and make sure to diversify investments in the future.

Already this week, Lehman Brothers Holdings, Inc., has filed for bankruptcy, and Merrill Lynch & Co. faced a forced sale to Bank of America. American International Group, Inc., the world's largest insurer, has been seeking emergency funding.

Greater Killeen Chamber of Commerce president John Crutchfield said he had not heard of any local institutions having trouble as a result of the New York tremors but said, "I imagine a lot of people everywhere are going to see a dip in their 401(K)'s for a while."

First Texas Bank president Patton Kaufman, who is also outgoing board chair of the GKCC, said, "These developments probably won't affect us all that much. These businesses will be shored up either by sales or by government aid, and it should bolster public confidence that our government is strong enough to prevent catastrophes in either the short or long terms.

"I think we'll come out of this with new leaders in the financial industry."

He said he believes the migration from economically afflicted areas of the country will accelerate "because Texas institutions are regional, not national, and they're well-grounded. They've followed the rules of prudent operations." He said he thinks Bank of America, which bought Merrill Lynch, became a giant because it's one of the national firms that followed the same rules. "They never went out on a limb with questionable lending or other practices," he said.

Peter Beronio, a local certified financial planner with Mutual Service Corp., said, "I don't think the crisis is over, but I don't think it's due to widespread instability in the credit markets. All the firms affected were participating heavily in subprime mortgages and the like.

"I'm sure it's all perplexing to the average person, but that points to the importance of well-managed portfolios with broad diversification," Beronio said. "You need to be well-advised and comfortable with what you have. If you calm down and get help with it, you can make sure it will do what you want. For most people, that means building retirement income."

He said he's sure the crisis will lead to tighter lending standards and that regulation will be intensified. "That's really long overdue," he said. "Most major institutions are already making changes on their own. For too long, too many lenders have been letting verification of income go undocumented, when they should have it on everything from car loans to home loans. We've had ridiculously easy lending standards. But we fix things pretty quickly compared with other cultures in the world."

Beronio said letting market standards prevail will be an essential part of the correction. "There will be more people out of work, more foreclosures and so forth. It sounds harsh, but it's necessary to let the market correct itself. Ultimately, we'll be better off because of tightened standards governing the operation of our financial system."

He said he's been seeing some people locally who have too much invested in volatile holdings. "You should never be overconcentrated anywhere," he said. "Few people understand the market, so they should have good advice on how to guard against heavy losses."

Contact Don Bolding at or (254) 501-7557.

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