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Grand County Main Street not hit by Wall Street woes

Tonya Bina/Sky-Hi Daily NewsPower World in Granby is among those Grand County businesses that are prospering despite recent gloom and doom on the national economic front. Local bankers as well point out that main street banks are still giving out loans and remain largely unaffected by troubles in investment banks.
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News of recession, thoughts of depression, a possible bailout and tight credit markets are the sobering reality at the eye of the Wall Street storm, but on the peripheral, Grand County’s Main Streets seem to be holding up.

Banks from Winter Park to Kremmling are still making loans, bank officials say. And most businesses seem to be continuing with commerce as usual.

Tom McConathy, owner of Country Home Outfitters, said plans are still in place to expand the sister Country Ace Hardware store in Granby. September business was as good as July, he said.



Although the business owner plans to finance the expansion through current funds, “If the (economic) situation continues to deteriorate, I’ll be concerned in the future for lines of credit and so forth,” he said. “We’re still optimistic at this point.”

One might think fuel-dependent sports such as ATVing and snowmobiling would take a hit during a national economic crisis, but Power World General Manager Jon Haines says last quarter sales at the Granby store are up over last year’s.



“Our customer base is very loyal,” Haines said. “It’s kind of funny, we’re doing very well.”

For Denver residents or those who live in nearby states, recreation in the mountains remains the steadfast substitute for an expensive vacation. Even during sketchy economic times, playing in the mountains is what an individual uses to make him or her feel all the hard work accomplished during the week is still worth it, Haines said.

‘Real banks’ vs. investment banks

“Real banks had little involvement in creating the crisis,” writes Don Childears, president of the Colorado Banker’s Association in an informational document to consumers.

The Main Street banking industry is distancing itself from unregulated financial institutions at the center of the Wall Street storm.

“It’s not to say that the banking industry is not immune to what’s going on in the economy,” said Carly Fuller, assistant vice president of Millennium Bank, Fraser, “but there’s a little bit of misinformation. Because we’re not the cause of it. It’s the investment banks. Because they have ‘bank’ in the title, community banks get rolled in with that, so it gives us a little bit of a bad rap.”

The highly regulated banking industry points out that only 14 FDIC banks nationwide out of 8,451 have failed in 2008, up from three last year. As of June, 117 banks nationwide were considered “troubled.” But “troubled banks are the exception, not the rule,” Childears said. “On average since 1982, 87 percent of those troubled banks never failed ” they worked their way back to health with extra attention like a patient gets in a hospital.”

Childears’ statements endorses a Congress-approved “expeditious” economic stabilization package.

National, local effects

“It’s even confusing to the bankers, I think, as far as trying to get their head around everything that’s going on,” Frank DeLay, Grand Mountain Bank president, said Thursday, the day before the U.S. House was scheduled to vote on a government bailout of the investment banking industry.

“But in my mind, there’s no reason to really panic about it. There’s some stuff happening in the market way out there that may eventually impact us, but still for the most part, there’s not a direct link to what’s happening out there to what’s happening here.

“I’d be a little more concerned if the bailout doesn’t happen,” he said. “A lot of the bigger banks may really slow down their lending or stop their lending, and eventually that could trickle down to here locally.”

DeLay has heard of a Front Range individual’s home equity line of credit from an outside bank cut off due to decreasing home values. There are also reports of other banks suspending loans until the crisis subsides, but DeLay said he is not aware of any banks doing that locally.

Both Millennium and Grand Mountain officials say they are analyzing loan borrowers prudently and diligently to protect bank liquidity and capital, as well as cutting back on speculative building loans.

“When evaluating speculative construction loans, development loans, I’d say we’ve probably pulled back on those a little bit, but not completely,” Fuller said.

“Speculative building: That’s a little bit harder to get a loan on these days,” DeLay said. “We have some, but we’ve never been very active in that area.”

At the Edward Jones investment firm in Granby, Branch Office Administrator Kathy Burke said some people are seeing 401Ks drop in value to the point where they are worth the same as the loans investors took out against the 401Ks.

Fielding calls at the office Thursday, Burke was part counselor, part financial confidant.

“It’s an emotional situation. Some people are acting off of emotions rather than professional guidance,” Burke said.

“So many people are bailing out and selling their 401K when they’re at the bottom,” she said. “Then they’re locking in their loss. That’s the biggest mistake that a lot of people do. They lock their loss by selling at the low.”

There have been 32 down markets since 1850, she said, and 32 rebounds in the market, making the point that the current financial situation is bound to rebound.

“It’s a matter of waiting until it comes back up,” she said. “It’s kind of like a roller coaster ride. They tell you to keep your arms and legs in. If your going along and rolling along and then get really scared and jump out, what’s going to happen is you’re going to get hurt.

“But if you just ride it through until the very end when it stops, you’ll be fine.”

” Tonya Bina can be reached at 887-3334 ext. 19603 or e-mail tbina@grandcountynews.com.


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