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Bay Co. Banks Struggling
10/06/08 - 04:41 PM
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The tenacity of Americans is tested Monday as Wall Street plunges 800 points.  It’s four year low.

The future of many troubled banks remains in question.  Through the first nine months of the year, 13 banks, savings and loans were taken over by the Federal Deposit Insurance Corporation, according to the Associated Press.  That’s more than the previous five years combined.  More than 100 banks nationwide are expected to fail next year.

While People’s First officials say the bank is not in trouble, it is feeling the effects of a troubled economy. 
   
“We built our business by putting people in homes,” says Steve Bornhoft, People’s First Bank Senior Vice President of Marketing.  “Loss of business results in people not being able to make payments.”

Bornhoft says there are 33 People’s First branches statewide, with $1.8 billion in assets.
He says banking with People’s First is still safe.

“We stayed away from sub-prime lending so we’re fortunate.”

People’s First may stay, but local branches of Wachovia expect a change.  Citigroup and Wells Fargo are in a bidding battle over the bank.  Summit Bank President Andy Stein says account holders will have full access and coverage no matter what the outcome.
   
“If the FDIC were to close a bank, they close it on Friday, open it on Monday morning.  It doesn’t have any effect on customers at all.”

The $700 billion “Bailout Plan” will increases insurance coverage on your money.  The FDIC now covers you $250,000 instead of $100,000.  Stein says loopholes allow a five person family to ensure $2.5 million under one account.

“Sit down with your banker and they can council you on how to best maximize the insurance on accounts.”

In the midst of an economic meltdown, Stein says the last thing you should do is cancel your account.

“The depositor needs to have total confidence in their local banks.  All local banks are well run companies.  Some have problems, but it’s not severe.  These banks are going to be around for a while.”