Bankers: Financial markets need help

"Greed and stupidly" led to the current financial crisis rattling the nation's economy, said Terry Frydenlund, president and CEO of First Bank Yuma.
 
Now Wall Street needs a helping hand to turn the crisis around, he told an Arizona Western College business class during a panel discussion on current national financial events.
 
As it turned out, the class began less than an hour after the U.S. House of Representatives voted 228 to 205 to reject the $700 billion economic bailout package for the nation's financial markets, with several lawmakers saying they feared support of the bill would jeopardize their chances at the polls Election Day.
 
When asked his thoughts on the bailout bill, Frydenlund responded that "the markets need help" to bring some stability to Wall Street and restore consumer confidence." However, he added, "oversight and accountability need to be improved."
 
"I've already seen the movie and know the end," he said, referring to the Depression of 1929-30. "I don't want to see that again."
 
The biggest problem with the bailout bill, said Edward Kerwin, chief credit officer of First Bank Yuma, is that it heavily involves the federal government. "It's like letting the fox in the hen house."
 
On the other hand, he said, "some kind of bailout is needed or the financial markets will freeze."
 
That will mean much tighter credit for individuals and businesses alike, he said.
 
Despite the "doom and gloom" over the national economy, though, Frydenlund cautioned against painting Yuma's economy with the "same broad brush strokes."
 
"There are a lot of bad things going on," said Frydenlund, "but let's put things in perspective. The financial institutions in Yuma are doing OK. It's not that bad in Yuma."
 
He said First Bank Yuma and the other community banks here "still have liquidity and we're still making loans."
 
One factor, he said, is that banks are highly regulated, something that seems to have been lax with the mortgage banks. "I regularly get visits from the bank regulators. I call them the silent partner. Where were those regulators on Wall Street?"
 
His advice to the students: "Understand the strength of your bank ... and be proactive in managing your money."
 
Ken Rosevear, executive director of the Yuma County Chamber of Commerce, agreed that Yuma is somewhat "insulated" from the higher risks facing the rest of the nation. "We're later coming into a downturn and earlier coming out."
 
For example, he said, the home foreclosure rate in Imperial County is four times that of Yuma County. "Many people there didn't even make the first payment."
 
The forecast looks good for the three traditional legs of the Yuma-area economy: agriculture, tourism and the military, Rosevear said. In addition, manufacturing is playing a larger role in the economy to become a fourth leg.
 
"Agriculture is still the king," he said, although there probably is less lettuce in the ground this fall than in past years as a result of higher fuel costs, soaring fertilizer costs and an effort to reduce supply to more equal demand.
 
"Farmers will be working both smarter and harder," he said.
 
Rosevear expects Yuma's military presence to play an ever larger part in the local economy with the testing activity at Yuma Proving Ground, the startup next year of the General Motors hot weather test complex at YPG and the coming of new products such as the Joint Stryker Fighter to Marine Corps Air Station Yuma.
 
As for tourism, an informal survey of area recreational vehicle parks indicates reservations for the coming winter are equal to or even up from last year, he said. "And they spend big dollars."
 
Today, the Yuma area is home to 16 manufacturing plants, Rosevear said, to make for a "strong manufacturing" component of the economy."


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Joyce Lobeck can be reached at jlobeck@yumasum.com or 539-6853.