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The Bank Bashing Baloney

by Mark Singleton


Day after day, night after night, from the Today Show to Nightline, the media has attacked the banking industry.  From major publications to minor public figures, bank bashing is booming.  Well, I’m tired of it and I don’t want to take it anymore.

According to the FDIC, only 3%, or approximately 250 of the 8,300 banks they insure are banks at risk.  That Citibank and Chase, WaMu and Wachovia have sunk or need a lifejacket is certainly a situation that is threatening the economy, especially when the 19 largest banks represent two-thirds of all banking assets.  However, the vast majority of the other 8,000 banks are safe, solid and secure even in these troubled waters.

The national press seems to be nurturing a public perception that a bank is a bank is a bank. That perspective creates a culture that if Bank of America is going in the dump, then all other banks are trash. 

As an example, on Sunday, March 9th the lead story on 60-minutes was entitled:  Your Bank Has Failed.  Correspondent Scott Pelley begins the segment by saying:  “A lot of people are worried about their bank these days.  While devastated giants like Citi Group get bailed out again and again and again, many smaller banks are failing.”

So Scott Pelley introduces the piece about the current banking environment with words like “a lot of people….” and … “many smaller banks are failing.” 

He then turns to Sheila Bair, the chairperson of the FDIC and asks:  “How many banks failed last year?”

Ms. Bair responds:  “25.” 

Mr. Pelley then asks:  “How many do you expect this year?” 

The reply was:  “It’s going up, there has been 16 already.”

What the public hears is the portrait of a distressed banking industry.  They hear, on prime time TV that “many smaller banks are failing.”  However, in reality the sixteen that were closed in 2008 represents less than 2/10ths of 1% of all the banks insured by the FDIC.  Even if twice that many fail this year, that would mean less than one-half of 1% of all FDIC insured banks would be closed.

Every day we have customers ask us about the solvency of our bank.  We tell them that we are well-anchored with sound management and solid practices.  And then we hear responses like:  “but Katie Couric said… ,” or “Time Magazine stated…”  The government has created a pot full of fear and the media is stirring the stew.

Every day the lead newscast stories or national headlines declare despair.  My contention is that there is another whole side that is not being told, the one that proclaims that if 3% of the banks are troubled that leaves an incredible 97% of the nation’s banks that are stable. 

We need encouraging words to combat what we are hearing from politicians.  And, I believe, the general public is responding in very positive ways.  Instead of being like the government and spending billions and billions of dollars on pork projects, Americans are going on a diet.  Less fat, more lean.

You won’t find many of those 8,000+ good banks in America that put their eggs in the basket of sub-prime loans.  You won’t see many of the executives of community banks flying in company jets.   The pattern for failure has a common denominator of greed.  The overwhelming majority of the good bankers have a different value system:  less me, more you.

Is it tough out there?  Certainly it is.  However, the American Spirit is strong.  People will do what it takes to rebound.   So will the 8000+ good banks.  They always have, they always will.

A turnaround will happen.  Americans in general and folks in Ellis County in particular tend to stand up to down times.  They roll-up their sleeves and survive all the way to success.  We are time-tested tough and we will be again.                     

Mark Singleton is the President and CEO of Citizens National Bank of Texas.  This column is the first in a series that examines what banks, businesses and the general public in Ellis County can do to combat the current tough economic times.