By Don Bolding

Killeen Daily Herald

Central Texas community bankers are urging their customers and the public at large not to lose faith in the banking system in the wake of the national storm caused by devalued mortgages, while members of the public are dealing with feelings of helplessness, anger or both.

The House of Representatives defeated the first attempted bailout package Monday, and the stock market dropped 700 points. Union State Bank president Coleen Beck said the meaning is that "people are sick of bailing out the big firms, but everybody needs to just calm down and get off Wall Street and back to Main Street because the community banks are well capitalized. We never made any subprime loans, and we did not have stock in Fannie Mae or Freddie Mac."

She said, "It was the big banks and the investment banks that got us into this, and people should think about that and not just go for the best interest rate. People should return to the community banks and start saving again."

She noted that the Federal Deposit Insurance Corp. has tried to widen the field of possible insurers on an account, trying to provide more options.

"But the people want any firms that are bailed out to pay it back," she said.

She said the Independent Community Bankers Association is trying to spread the power of the Department of the Treasury around and insure that the playing field for nationwide and community banks is level in the future. Among the ICBA's package of provisions in HR 3997 were:

ensuring that community banks have access to the Troubled Assets Relief Program;

allowing community banks to take capital losses against ordinary income for Fannie Mae and Freddie Mac preferred share losses;

authorizing the Securities and Exchange Commission to suspend mark to marketing accounting rules;

prohibiting the U.S. Treasury from establishing future guarantee programs for money market mutual funds;

allowing the Federal Reserve to pay interest on banks' "sterile reserves" beginning Oct. 1 of this year, three years earlier than previously permitted;

and requiring the President to seek new legislation in five years to recoup any losses from the financial industry.

"The current liquidity and credit crisis has constricted the flow of funds to Main Street America and has driven up the funding costs of community banks," the ICBA said.

Keith Maxwell, regional vice president for the Waco-based Extraco Banks for West Bell County, said the worst effect he has seen is erosion of customer confidence in all banks.

"There were some mortgage companies in the area making subprime loans in years past, but they're all gone now. The local banks didn't do that," he said. "People are well advised not to do anything rash but to examine the condition of any bank they're concerned about online. The Freedom of Information Act guarantees you can do that."

Among bank customers Monday, David Davis, a retired sergeant major who also is retired from Pitney Bowes, said, "The big firms had the politicians in their pocket. It was ridiculous that you could get a loan without documentation. The dumb crooks are in Gatesville; the smart ones are in Austin and Washington. All we can do now is put a band-aid on it. A tourniquet would take discipline, and that's what we don't have.

"But the country has been through worse, and we'll get through this. We got through the Civil War, we got through a worse panic than the depression in the 1890s and then through the Depression. The economy goes in cycles, up and then down. It's just too bad it has to happen this way."

Oteeka Davis, who works for Civil Service, said she's glad her retirement isn't in a 401K.

"The whole thing is scary, because there's nothing we can do about it," she said. "The people at the top are going to do what they want."

Joe Castro of Speedway Auto Sales said, "I don't have much good to say about it. I'm a small businessman, and if I do something wrong, they're not going to bail me out. We're not on a level playing field with big business. I feel sure that some changes in the right direction will be made, but I just hope they're enough."

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

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