Rural bankers show support for bailing Fannie, Freddie
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By The Associated Press
Most rural commercial bank CEOs surveyed in eleven Midwestern and Plains states support a federal bailout of mortgage lenders Fannie Mae and Freddie Mac in the event of financial collapse.
But the new survey says only about 11 percent of the bankers supported such an intervention for investment banks, such as Bear Stearns.
Some financial institutions are struggling to cope with billions of dollars of losses on bad mortgages.
Lincoln Journal Star
With financial markets rattled and volatile, Nebraska bankers tried to reassure the public that their industry is healthy and safe, nationally and locally.
A week ago Friday, federal regulators seized a California bank, IndyMac, and reopened the bank Monday under the control of the Federal Deposit Insurance Corporation. Deposits to $100,000 are fully insured by the FDIC.
In a combined press release, the Nebraska Bankers Association and the Nebraska Independent Community Bankers said Nebraska depositors should know that the safest place for their money is in the bank, where deposits are insured to $100,000 by the FDIC.
Nebraska has not seen a bank failure for 18 years, the association said.
The Nebraska Independent Community Bankers is a Nebraska trade association for privately held financial institutions.
The Nebraska Bankers Association is a statewide association representing 240 of Nebraska’s 242 commercial banks, 13 of the 15 savings and loan institutions in the state, and one trust company.
The Bush administration and the Federal Reserve announced on Sunday that they were putting together a support program for Fannie Mae and Freddie Mac to try to stave off serious troubles for the two mortgage giants, which hold or guarantee more than $5 trillion of the nation’s mortgages, almost half of the total.
Creighton University economist Ernie Goss Goss and Bill McQuillan, CEO of City National Bank in Greeley, Neb., created the monthly economic survey of rural bank CEOs in 11 states: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming.
The average community population covered by the survey is about 1,300.
The latest survey showed the overall Rural Mainstreet Index was at a weak 41.4, up from June’s 40.8, but down dramatically from 54.5 in July 2007. An index greater than 50 indicates a growing economy over the next three to six months.
“Not only were current economic conditions weak in the rural agriculturally dependent areas, the confidence index, which gauges the bankers’ outlook six months out, plunged to a record low 31.8,” said Goss.
The new hiring index indicated a loss of jobs for the seventh straight month, partially due to escalating energy prices, according to the report. The index was at 42.9 for July, up slightly from June’s 41.3
Sixty percent of bankers reported improved crop conditions, and in Illinois, Iowa and Missouri, which saw widespread recent flooding, more than 82 percent of the CEOs reported improving conditions.
Dale Torpey, president of Federation Bank in Washington, Iowa, said crops have improved, but “everything is at least three weeks behind.”
Farmland prices cooled as well, declining to an index level of 61.6, its lowest level since August 2006.
Farm implement sales remain healthy, with a July reading of 62.3, down from June’s 64.7 and May’s 69.6.
The retail sales index inched up to a weak 35.1 from June’s 32.1.
The rural bankers survey index for home sales in July plummeted to 25.4, from 34.1 in June.
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On the Net:
Creighton economic surveys: http://www2.creighton.edu/business/economicoutlook
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