Prompted in part by depositor anxiety, the Idaho Department of Finance on Tuesday took the unusual step of reassuring residents there is no Bear Stearns in the woods.
In fact, said Financial Institutions Bureau Chief Mary Hughes, Idaho banks, thrifts and credit unions are in no danger of going the way of the Wall Street investment bank rescued from failure last month by JPMorgan Chase and the Federal Reserve Bank.
Loan delinquencies and foreclosure rates at Idaho banks are well within the range established in Idaho over the last 20 years, Hughes said, thanks to lending practices that did not expose institutions to the subprime loans plaguing banks in other states.
In a prepared statement, department Director Gavin Gee noted asset and loan growth in 2007 outstripped rates for all 50 states, while charge-offs and non-current loans trailed national averages.
Idahoans, he said, “need to know that Idaho’s banks and credit unions are safe places to keep their money.”
Hughes said bank officials were concerned that losses at some large banks were confusing customers who do not understand the difference between investment banks that help businesses raise new capital and the commercial banks that make loans to individuals and local businesses.
And while mortgage delinquencies nationwide are running at 6.31 percent, the rate in Idaho is just 3.86 percent. Foreclosures, at 1.47 percent of mortgage loans, are barely half the national rate of 2.84 percent.
“We feel a responsibility to get that story out,” said Hughes, who nevertheless added that foreclosure rates are likely to keep climbing well into 2008.
She said the department had planned to report on the relative health of Idaho’s banks but did not act until Bear Stearns stumbled, and the Bush administration announced a new regulatory plan that would centralize some of the regulatory responsibilities now in state hands.
“The Blueprint for Financial Regulatory Reform,” Gee said, would harm consumers by reducing the number of financial institutions and the products they offer.
Hughes said the department has regularly reviewed bank books, looking in particular for ill-advised concentrations of real estate holdings. Some examiners have more than 25 years of experience, she said.