Your 401(k) might take a beating for a while but your bank isn’t going anywhere and there’s plenty of money locally to keep mom and pop businesses going in Acadiana.
Local bankers urge calm, saying that because of conservative lending policies and the strength of the oil industry, Louisiana remains somewhat insulated from the turmoil on Wall Street.
As The Teche News goes to press on Tuesday, federal lawmakers were regrouping in an effort to find a politically acceptable plan to slap a $700 billion band-aid on the nation’s troubled financial system. The failure to pass a bailout package on Monday sent the Dow Jones into a 778-point nose-dive.
“Your deposits are solid, the banks in St. Martin Parish are very conservatively run,” said Fred Mills Jr., president of Farmers and Merchants Bank.
“We’re in a different situation in Louisiana at this point in time in that we have been somewhat insulated from the sub-prime issues that have plagued some of these other larger regional banks,” said Vernon Johnson, CEO of Teche Federal Bank.
“Most the most part it’s business as usual for us,” said Johnson. “We’ve got money to lend and we’re anxiously seeking new relationships with customers. That has not changed.”
“As usual the media blows everything out of proportion,” said First Louisiana National Bank CEO and president James Fontenot.
“Ninety percent of the banks in this country are solid, especially the community banks, because they don’t any of this stupid stuff these big brokerage houses and investment bankers and large banks do.”
A national downturn in the economy could eventually “trickle down” into Acadiana, said Fontenot, but it won’t cause local banks to fail.
“The events that have been occurring nationally over the last two weeks are amazing,” said St. Martin Bank and Trust president Paul Durand. “Things like this have not happened in my lifetime. But what is happening nationally doesn’t necessarily have an impact on community banks in Louisiana. I will tell you that St. Martin Bank and Trust Company is as strong as it’s ever been.”
People with money in the stockmarket, which is where most retirement funds are nowadays, will suffer losses – but not, said Teche Federal’s Johnson, necessarily irreversible losses.
“Everyone recognizes or should recognize that as time passes you have peaks and valleys in this whole system, and right now we’re going through a valley with regards to stock values. But this too will pass.”
Mills said he’s more worried about the impact a reverse pendulum swing might have on local banking practicers.
“Congress is going to have hearings and they’re going to come up with regulations. But are those regulations going to be germane to St. Martin Parish?”