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Banks, Credit Unions Not Seeing Customers Panic

POLK COUNTY -- The failure of some major housing mortgage companies and banks last month, Congress' initial rejection of a $700 billion federal bailout, and Wall Street's historic stock sell-off on Se

POLK COUNTY -- The failure of some major housing mortgage companies and banks last month, Congress' initial rejection of a $700 billion federal bailout, and Wall Street's historic stock sell-off on Sept. 29 has rattled the nerves of consumers across the county.

Representatives of some local and regional financial institutions said, however, that while their customers have voiced concerns, the situation isn't as dire as what has reported nationally.

"There are some community banks that have felt some effects from the housing market downturn or those with trouble working through their home inventory," said Linda Navarro, president of the Oregon Bankers Association.

But "generally, Oregon's banks are healthy, they're not the Wall Street companies that were the impetus for the federal stabilization bills."

Susan Morrill, manager of Citizens Bank in Dallas, said very few of her 800 or so customers have transferred portions of their account to make other investments to safeguard their money, and that there has been no complete withdraws.

"We've actually had new money come into the bank from people restructuring their investments to limit their exposure," she said.

David Elmer, CEO of Oregon First Community Credit Union, said his clients' questions of late stem from media coverage and center on the safety of and insurance on their deposits and if it's more difficult now to get loans.

"It hasn't affected our programs or who we give money to," Elmer said. "The only indirect effect impacts every other financial institution and that's liquidity, which the government is trying to fix."

Morrill said that perhaps 10 to 20 percent of her customers "were coming in gravely concerned."

"But the biggest bulk of our clients," she said, "once we explain we haven't done subprime lending and that we have extra reserves, they say 'that's all I needed to hear, I'm fine.'"

Credit unions, which don't traditionally participate in mortgage lending and are owned by their customers/members, have seen somewhat of a boost recently. Deposits there, as with banks, are federally insured.

Peggy Mehl, the regional manager of OSU Federal Credit Union branches in Polk and Marion counties, said her company has seen an increase in the number of new accounts during the past few weeks.

"Some are bringing them in from other financial institutions," she said. "I couldn't give a figure, but a lot of it is due to what's happening" with the economy.

Mehl said she isn't seeing fewer loans being awarded now than previously. Morrill said she believes there is less mortgage activity for her and that underwriting has gotten more stringent.

"But as far as small business lending, we haven't seen a slowdown at all," she said.

All of which isn't to say that industry representatives aren't worried about the long-term effects of the economic turmoil.

"I believe the condition of the economy has been politicized, as one would expect during election season," Elmer said.

But he added that the liquidity issue needs to be resolved soon to prevent a worse-case scenario, in which some institutions wouldn't have enough money for loans for the average consumer.

He said that he couldn't say whether last week's $700 billion government bailout was "the right solution or not, but something needs to be done to help the situation."

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