Community Banks Are Safe And Sound
To The Editor:
During my 37-year banking career, I can't recall a time when our financial system has been under such severe stress. Our nation's economy and our financial system have been at the forefront of the news, with headlines about the "banking crisis." During the past few months, we witnessed the acquisition or failure of three of the five largest investment banking firms on Wall Street.
The reason that we are reading and hearing so much news that talks about the "banking crisis" is a real result of the words that are being used. When one word is used to mean several different things, it inevitably creates confusion. For example, most of us know what a bank is. But sometimes a business calls itself a "bank" even though it is not an insured depository institution.
Bear Stearns, the investment firm headquartered in New York City, was not a commercial bank. It was an investment "bank." The word "bank" has also been applied to mortgage companies like Countrywide. Their function, their purpose and their regulation differ dramatically from the federally insured depository institutions that most of us know as "banks."
From my perspective, our current problems arose on Wall Street - not on Main Street. The reality is there are more than 8,400 banks in this country and only a tiny percentage of those institutions are under severe stress. The banking industry - traditionally federally insured, federally regulated depository institutions, including thousands of local community banks - is safe and sound.
We know that our financial system is being tested. But, it s importnat to remember that the system is also showing its resiliency. The vast majority of community banks have been and continue to be the safest and strongest financial institutions in our nation's financial system. Most community banks like F&M Trust are solid because they follow conservative business practices and procedues with local management and board oversight.
Our nation has weathered turbulent financial times in the past and we've persevered to come back better and stronger. Through it all, community banks have been serving consumers, businesses and local communities helping them build secure financial futures on Main Streets across this nation. William E. Snell Jr. President & CEO F&M Trust