Some regional banks doing just fine
Not all banks are created equal -- some smaller banks have taken a more personal approach to helping people get the loans they need.
Doug Chaffin is president of Monroe Bank and Trust in Michigan, and his bank is not taking federal bailout money. Chaffin says that unemployment in the region is a problem; customers won't take out loans if they have no income.
His state ranks sixth among all states in foreclosures last year with more than 145,000 people losing their homes, up 2% from 2007. For one thing, Doug's bank is like many regional banks, Chaffin's didn't get involved in packaging and re-selling their mortgages; they know exactly where those mortgages are.
On not taking bailout funds, Chaffin says, "There is a cost to that funding, in our case, it would cost our shareholders $1.5 million in the dividends that we would pay the U.S. Treasury annually, plus dilute the ownership of the stock that they do hold. But frankly, the primary reason is that we just don't need it. We are well-funded, well-capitalized, and there is no need to take on that cost if we can meet the needs of our customers as it is."
"We all have our share of problems. In our local market, we have a 12% unemployment rate, currently, which means more and more borrowers don't have the ability to repay us. However, we, for years, have maintained a pretty strong capital level."
Monroe Bank and Trust is a step ahead of the rest of the nation in dealing with the problem, if only for the fact that they have been dealing with the recession for a period of time before its effects were felt nationwide. The state's unemployment rates started to increase as far back as 2001.
Like many other banks, Chaffin's is busy negotiating the terms of homes that would otherwise be foreclosed upon. He says, "First and foremost, no bank wants to foreclose, no bank wants to take someone's home. That is the last, absolutley the last resort." His firm will, on occasion, send out officers to people's homes to try to talk one-on-one with them.
Some banks have been the target of protests for their policies less flexible than those of Monroe Bank and Trust. That is not the case for Chaffin: "Monroe is a small town. I live here, work here, go to church here. I have breakfast with my customers at the local coffee shop, walk across the street to the diner and have lunch with them. They understand the challenges, and they understand that we are trying to help them.
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